Correlation Between Geberit AG and Sonova H
Can any of the company-specific risk be diversified away by investing in both Geberit AG and Sonova H 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 Sonova H into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geberit AG and Sonova H Ag, you can compare the effects of market volatilities on Geberit AG and Sonova H 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 Sonova H. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geberit AG and Sonova H.
Diversification Opportunities for Geberit AG and Sonova H
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Geberit and Sonova is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Geberit AG and Sonova H Ag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonova H 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 Sonova H. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonova H Ag has no effect on the direction of Geberit AG i.e., Geberit AG and Sonova H go up and down completely randomly.
Pair Corralation between Geberit AG and Sonova H
Assuming the 90 days trading horizon Geberit AG is expected to generate 1.5 times less return on investment than Sonova H. In addition to that, Geberit AG is 1.03 times more volatile than Sonova H Ag. It trades about 0.04 of its total potential returns per unit of risk. Sonova H Ag is currently generating about 0.06 per unit of volatility. If you would invest 29,890 in Sonova H Ag on November 10, 2024 and sell it today you would earn a total of 480.00 from holding Sonova H Ag or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Geberit AG vs. Sonova H Ag
Performance |
| Timeline |
| Geberit AG |
| Sonova H Ag |
Geberit AG and Sonova H Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geberit AG and Sonova H
The main advantage of trading using opposite Geberit AG and Sonova H positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geberit AG position performs unexpectedly, Sonova H 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 Sonova H will offset losses from the drop in Sonova H's long position.The idea behind Geberit AG and Sonova H 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.| Sonova H vs. Straumann Holding AG | Sonova H vs. Geberit AG | Sonova H vs. Sika AG | Sonova H vs. Givaudan SA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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