Correlation Between Emmi AG and Metall Zug
Can any of the company-specific risk be diversified away by investing in both Emmi AG and Metall Zug 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 Metall Zug into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emmi AG and Metall Zug AG, you can compare the effects of market volatilities on Emmi AG and Metall Zug 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 Metall Zug. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emmi AG and Metall Zug.
Diversification Opportunities for Emmi AG and Metall Zug
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Emmi and Metall is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Emmi AG and Metall Zug AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metall Zug AG 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 Metall Zug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metall Zug AG has no effect on the direction of Emmi AG i.e., Emmi AG and Metall Zug go up and down completely randomly.
Pair Corralation between Emmi AG and Metall Zug
Assuming the 90 days trading horizon Emmi AG is expected to generate 0.64 times more return on investment than Metall Zug. However, Emmi AG is 1.56 times less risky than Metall Zug. It trades about -0.33 of its potential returns per unit of risk. Metall Zug AG is currently generating about -0.26 per unit of risk. If you would invest 85,000 in Emmi AG on August 29, 2024 and sell it today you would lose (6,800) from holding Emmi AG or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emmi AG vs. Metall Zug AG
Performance |
| Timeline |
| Emmi AG |
| Metall Zug AG |
Emmi AG and Metall Zug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emmi AG and Metall Zug
The main advantage of trading using opposite Emmi AG and Metall Zug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emmi AG position performs unexpectedly, Metall Zug 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 Metall Zug will offset losses from the drop in Metall Zug's long position.| Emmi AG vs. Santhera Pharmaceuticals Holding | Emmi AG vs. Newron Pharmaceuticals SpA | Emmi AG vs. Basilea Pharmaceutica AG | Emmi AG vs. Evolva Holding SA |
| Metall Zug vs. Bucher Industries AG | Metall Zug vs. Burckhardt Compression | Metall Zug vs. Also Holding AG | Metall Zug 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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