Correlation Between EMS CHEMIE and Schindler Holding
Can any of the company-specific risk be diversified away by investing in both EMS CHEMIE and Schindler 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 Schindler 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 Schindler Holding AG, you can compare the effects of market volatilities on EMS CHEMIE and Schindler 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 Schindler Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMS CHEMIE and Schindler Holding.
Diversification Opportunities for EMS CHEMIE and Schindler Holding
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EMS and Schindler is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding EMS CHEMIE HOLDING AG and Schindler Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schindler 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 Schindler Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schindler Holding has no effect on the direction of EMS CHEMIE i.e., EMS CHEMIE and Schindler Holding go up and down completely randomly.
Pair Corralation between EMS CHEMIE and Schindler Holding
Assuming the 90 days trading horizon EMS CHEMIE HOLDING AG is expected to under-perform the Schindler Holding. But the stock apears to be less risky and, when comparing its historical volatility, EMS CHEMIE HOLDING AG is 1.05 times less risky than Schindler Holding. The stock trades about -0.29 of its potential returns per unit of risk. The Schindler Holding AG is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 24,950 in Schindler Holding AG on September 6, 2024 and sell it today you would earn a total of 500.00 from holding Schindler Holding AG or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMS CHEMIE HOLDING AG vs. Schindler Holding AG
Performance |
| Timeline |
| EMS CHEMIE HOLDING |
| Schindler Holding |
EMS CHEMIE and Schindler Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMS CHEMIE and Schindler Holding
The main advantage of trading using opposite EMS CHEMIE and Schindler Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMS CHEMIE position performs unexpectedly, Schindler 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 Schindler Holding will offset losses from the drop in Schindler Holding's long position.The idea behind EMS CHEMIE HOLDING AG and Schindler Holding AG 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.| Schindler Holding vs. Geberit AG | Schindler Holding vs. Givaudan SA | Schindler Holding vs. SGS SA | Schindler Holding vs. Straumann Holding 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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