Correlation Between Emmi AG and Luzerner Kantonalbank
Can any of the company-specific risk be diversified away by investing in both Emmi AG and Luzerner Kantonalbank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Emmi AG and Luzerner Kantonalbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emmi AG and Luzerner Kantonalbank AG, you can compare the effects of market volatilities on Emmi AG and Luzerner Kantonalbank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Emmi AG with a short position of Luzerner Kantonalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emmi AG and Luzerner Kantonalbank.
Diversification Opportunities for Emmi AG and Luzerner Kantonalbank
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Emmi and Luzerner is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Emmi AG and Luzerner Kantonalbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luzerner Kantonalbank and Emmi AG is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Emmi AG are associated (or correlated) with Luzerner Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luzerner Kantonalbank has no effect on the direction of Emmi AG i.e., Emmi AG and Luzerner Kantonalbank go up and down completely randomly.
Pair Corralation between Emmi AG and Luzerner Kantonalbank
Assuming the 90 days trading horizon Emmi AG is expected to under-perform the Luzerner Kantonalbank. In addition to that, Emmi AG is 1.97 times more volatile than Luzerner Kantonalbank AG. It trades about -0.32 of its total potential returns per unit of risk. Luzerner Kantonalbank AG is currently generating about -0.19 per unit of volatility. If you would invest 6,510 in Luzerner Kantonalbank AG on August 29, 2024 and sell it today you would lose (160.00) from holding Luzerner Kantonalbank AG or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emmi AG vs. Luzerner Kantonalbank AG
Performance |
| Timeline |
| Emmi AG |
| Luzerner Kantonalbank |
Emmi AG and Luzerner Kantonalbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emmi AG and Luzerner Kantonalbank
The main advantage of trading using opposite Emmi AG and Luzerner Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emmi AG position performs unexpectedly, Luzerner Kantonalbank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Luzerner Kantonalbank will offset losses from the drop in Luzerner Kantonalbank's long position.| Emmi AG vs. Bucher Industries AG | Emmi AG vs. EMS CHEMIE HOLDING AG | Emmi AG vs. Barry Callebaut AG | Emmi AG vs. Geberit AG |
| Luzerner Kantonalbank vs. St Galler Kantonalbank | Luzerner Kantonalbank vs. Banque Cantonale | Luzerner Kantonalbank vs. Berner Kantonalbank AG | Luzerner Kantonalbank vs. Emmi AG |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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