Correlation Between EMS CHEMIE and Interroll Holding
Can any of the company-specific risk be diversified away by investing in both EMS CHEMIE and Interroll Holding 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 Interroll Holding 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 Interroll Holding AG, you can compare the effects of market volatilities on EMS CHEMIE and Interroll Holding 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 Interroll Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMS CHEMIE and Interroll Holding.
Diversification Opportunities for EMS CHEMIE and Interroll Holding
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between EMS and Interroll is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding EMS CHEMIE HOLDING AG and Interroll Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interroll Holding 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 Interroll Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interroll Holding has no effect on the direction of EMS CHEMIE i.e., EMS CHEMIE and Interroll Holding go up and down completely randomly.
Pair Corralation between EMS CHEMIE and Interroll Holding
Assuming the 90 days trading horizon EMS CHEMIE is expected to generate 1.61 times less return on investment than Interroll Holding. But when comparing it to its historical volatility, EMS CHEMIE HOLDING AG is 1.88 times less risky than Interroll Holding. It trades about 0.35 of its potential returns per unit of risk. Interroll Holding AG is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 199,400 in Interroll Holding AG on October 30, 2024 and sell it today you would earn a total of 18,600 from holding Interroll Holding AG or generate 9.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMS CHEMIE HOLDING AG vs. Interroll Holding AG
Performance |
| Timeline |
| EMS CHEMIE HOLDING |
| Interroll Holding |
EMS CHEMIE and Interroll Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMS CHEMIE and Interroll Holding
The main advantage of trading using opposite EMS CHEMIE and Interroll Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMS CHEMIE position performs unexpectedly, Interroll Holding 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 Interroll Holding will offset losses from the drop in Interroll Holding's long position.| EMS CHEMIE vs. Metall Zug AG | EMS CHEMIE vs. Logitech International SA | EMS CHEMIE vs. Cicor Technologies | EMS CHEMIE vs. Hypothekarbank Lenzburg AG |
| Interroll Holding vs. Belimo Holding | Interroll Holding vs. Bachem Holding AG | Interroll Holding vs. VAT Group AG | Interroll Holding vs. Kardex |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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