Correlation Between EMS CHEMIE and Zehnder
Can any of the company-specific risk be diversified away by investing in both EMS CHEMIE and Zehnder 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 Zehnder 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 Zehnder, you can compare the effects of market volatilities on EMS CHEMIE and Zehnder 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 Zehnder. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMS CHEMIE and Zehnder.
Diversification Opportunities for EMS CHEMIE and Zehnder
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EMS and Zehnder is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding EMS CHEMIE HOLDING AG and Zehnder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zehnder 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 Zehnder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zehnder has no effect on the direction of EMS CHEMIE i.e., EMS CHEMIE and Zehnder go up and down completely randomly.
Pair Corralation between EMS CHEMIE and Zehnder
Assuming the 90 days trading horizon EMS CHEMIE HOLDING AG is expected to under-perform the Zehnder. But the stock apears to be less risky and, when comparing its historical volatility, EMS CHEMIE HOLDING AG is 2.04 times less risky than Zehnder. The stock trades about -0.02 of its potential returns per unit of risk. The Zehnder is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,070 in Zehnder on November 29, 2024 and sell it today you would earn a total of 130.00 from holding Zehnder or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMS CHEMIE HOLDING AG vs. Zehnder
Performance |
| Timeline |
| EMS CHEMIE HOLDING |
| Zehnder |
EMS CHEMIE and Zehnder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMS CHEMIE and Zehnder
The main advantage of trading using opposite EMS CHEMIE and Zehnder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMS CHEMIE position performs unexpectedly, Zehnder 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 Zehnder will offset losses from the drop in Zehnder's long position.| EMS CHEMIE vs. Logitech International SA | EMS CHEMIE vs. BB Biotech AG | EMS CHEMIE vs. Cicor Technologies | EMS CHEMIE vs. Softwareone Holding |
| Zehnder vs. Comet Holding AG | Zehnder vs. Schweiter Technologies AG | Zehnder vs. Bossard Holding AG | Zehnder vs. Bachem 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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