Correlation Between EMS CHEMIE and Burckhardt Compression
Can any of the company-specific risk be diversified away by investing in both EMS CHEMIE and Burckhardt Compression 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 EMS CHEMIE and Burckhardt Compression into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMS CHEMIE HOLDING AG and Burckhardt Compression, you can compare the effects of market volatilities on EMS CHEMIE and Burckhardt Compression 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 EMS CHEMIE with a short position of Burckhardt Compression. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMS CHEMIE and Burckhardt Compression.
Diversification Opportunities for EMS CHEMIE and Burckhardt Compression
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EMS and Burckhardt is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding EMS CHEMIE HOLDING AG and Burckhardt Compression in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burckhardt Compression and EMS CHEMIE 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 EMS CHEMIE HOLDING AG are associated (or correlated) with Burckhardt Compression. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burckhardt Compression has no effect on the direction of EMS CHEMIE i.e., EMS CHEMIE and Burckhardt Compression go up and down completely randomly.
Pair Corralation between EMS CHEMIE and Burckhardt Compression
Assuming the 90 days trading horizon EMS CHEMIE HOLDING AG is expected to under-perform the Burckhardt Compression. But the stock apears to be less risky and, when comparing its historical volatility, EMS CHEMIE HOLDING AG is 2.09 times less risky than Burckhardt Compression. The stock trades about -0.15 of its potential returns per unit of risk. The Burckhardt Compression is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 63,400 in Burckhardt Compression on September 13, 2024 and sell it today you would earn a total of 4,000 from holding Burckhardt Compression or generate 6.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMS CHEMIE HOLDING AG vs. Burckhardt Compression
Performance |
| Timeline |
| EMS CHEMIE HOLDING |
| Burckhardt Compression |
EMS CHEMIE and Burckhardt Compression Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMS CHEMIE and Burckhardt Compression
The main advantage of trading using opposite EMS CHEMIE and Burckhardt Compression positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMS CHEMIE position performs unexpectedly, Burckhardt Compression 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 Burckhardt Compression will offset losses from the drop in Burckhardt Compression's long position.The idea behind EMS CHEMIE HOLDING AG and Burckhardt Compression pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Burckhardt Compression vs. Sulzer AG | Burckhardt Compression vs. Helvetia Holding AG | Burckhardt Compression vs. Swiss Life Holding | Burckhardt Compression vs. Adecco Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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