Correlation Between EMS CHEMIE and Tecan Group
Can any of the company-specific risk be diversified away by investing in both EMS CHEMIE and Tecan Group 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 Tecan Group 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 Tecan Group AG, you can compare the effects of market volatilities on EMS CHEMIE and Tecan Group 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 Tecan Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMS CHEMIE and Tecan Group.
Diversification Opportunities for EMS CHEMIE and Tecan Group
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EMS and Tecan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding EMS CHEMIE HOLDING AG and Tecan Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecan Group 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 Tecan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecan Group AG has no effect on the direction of EMS CHEMIE i.e., EMS CHEMIE and Tecan Group go up and down completely randomly.
Pair Corralation between EMS CHEMIE and Tecan Group
Assuming the 90 days trading horizon EMS CHEMIE HOLDING AG is expected to generate 0.51 times more return on investment than Tecan Group. However, EMS CHEMIE HOLDING AG is 1.94 times less risky than Tecan Group. It trades about 0.0 of its potential returns per unit of risk. Tecan Group AG is currently generating about -0.06 per unit of risk. If you would invest 64,253 in EMS CHEMIE HOLDING AG on September 2, 2024 and sell it today you would lose (1,603) from holding EMS CHEMIE HOLDING AG or give up 2.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMS CHEMIE HOLDING AG vs. Tecan Group AG
Performance |
| Timeline |
| EMS CHEMIE HOLDING |
| Tecan Group AG |
EMS CHEMIE and Tecan Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMS CHEMIE and Tecan Group
The main advantage of trading using opposite EMS CHEMIE and Tecan Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMS CHEMIE position performs unexpectedly, Tecan Group 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 Tecan Group will offset losses from the drop in Tecan Group's long position.The idea behind EMS CHEMIE HOLDING AG and Tecan Group 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.| Tecan Group vs. Straumann Holding AG | Tecan Group vs. Sonova H Ag | Tecan Group vs. VAT Group AG | Tecan Group vs. Lonza 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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