Correlation Between Geberit AG and Emmi AG
Can any of the company-specific risk be diversified away by investing in both Geberit AG and Emmi 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 Geberit AG and Emmi AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geberit AG and Emmi AG, you can compare the effects of market volatilities on Geberit AG and Emmi 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 Geberit AG with a short position of Emmi AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geberit AG and Emmi AG.
Diversification Opportunities for Geberit AG and Emmi AG
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Geberit and Emmi is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Geberit AG and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG and Geberit AG 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 Geberit AG are associated (or correlated) with Emmi AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emmi AG has no effect on the direction of Geberit AG i.e., Geberit AG and Emmi AG go up and down completely randomly.
Pair Corralation between Geberit AG and Emmi AG
Assuming the 90 days trading horizon Geberit AG is expected to generate 1.16 times more return on investment than Emmi AG. However, Geberit AG is 1.16 times more volatile than Emmi AG. It trades about 0.04 of its potential returns per unit of risk. Emmi AG is currently generating about -0.04 per unit of risk. If you would invest 47,402 in Geberit AG on August 25, 2024 and sell it today you would earn a total of 5,278 from holding Geberit AG or generate 11.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geberit AG vs. Emmi AG
Performance |
| Timeline |
| Geberit AG |
| Emmi AG |
Geberit AG and Emmi AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geberit AG and Emmi AG
The main advantage of trading using opposite Geberit AG and Emmi AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geberit AG position performs unexpectedly, Emmi 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 Emmi AG will offset losses from the drop in Emmi AG's long position.The idea behind Geberit AG and Emmi 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.| Emmi AG vs. Bucher Industries AG | Emmi AG vs. EMS CHEMIE HOLDING AG | Emmi AG vs. Barry Callebaut AG | Emmi AG vs. Geberit 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |