Correlation Between EMS CHEMIE and Geberit AG
Can any of the company-specific risk be diversified away by investing in both EMS CHEMIE and Geberit AG 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 Geberit AG 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 Geberit AG, you can compare the effects of market volatilities on EMS CHEMIE and Geberit AG 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 Geberit AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMS CHEMIE and Geberit AG.
Diversification Opportunities for EMS CHEMIE and Geberit AG
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EMS and Geberit is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding EMS CHEMIE HOLDING AG and Geberit AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geberit AG 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 Geberit AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geberit AG has no effect on the direction of EMS CHEMIE i.e., EMS CHEMIE and Geberit AG go up and down completely randomly.
Pair Corralation between EMS CHEMIE and Geberit AG
Assuming the 90 days trading horizon EMS CHEMIE is expected to generate 10.04 times less return on investment than Geberit AG. But when comparing it to its historical volatility, EMS CHEMIE HOLDING AG is 1.18 times less risky than Geberit AG. It trades about 0.0 of its potential returns per unit of risk. Geberit AG is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 42,365 in Geberit AG on August 29, 2024 and sell it today you would earn a total of 9,815 from holding Geberit AG or generate 23.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMS CHEMIE HOLDING AG vs. Geberit AG
Performance |
| Timeline |
| EMS CHEMIE HOLDING |
| Geberit AG |
EMS CHEMIE and Geberit AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMS CHEMIE and Geberit AG
The main advantage of trading using opposite EMS CHEMIE and Geberit AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMS CHEMIE position performs unexpectedly, Geberit AG 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 Geberit AG will offset losses from the drop in Geberit AG's long position.| EMS CHEMIE vs. Geberit AG | EMS CHEMIE vs. Lonza Group AG | EMS CHEMIE vs. SGS SA | EMS CHEMIE vs. Swiss Life Holding |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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