Correlation Between Logitech International and Emmi AG
Can any of the company-specific risk be diversified away by investing in both Logitech International 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 Logitech International and Emmi AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Logitech International SA and Emmi AG, you can compare the effects of market volatilities on Logitech International 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 Logitech International with a short position of Emmi AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Logitech International and Emmi AG.
Diversification Opportunities for Logitech International and Emmi AG
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Logitech and Emmi is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Logitech International SA and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG and Logitech International 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 Logitech International SA 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 Logitech International i.e., Logitech International and Emmi AG go up and down completely randomly.
Pair Corralation between Logitech International and Emmi AG
Assuming the 90 days trading horizon Logitech International SA is expected to generate 1.5 times more return on investment than Emmi AG. However, Logitech International is 1.5 times more volatile than Emmi AG. It trades about 0.06 of its potential returns per unit of risk. Emmi AG is currently generating about -0.05 per unit of risk. If you would invest 5,651 in Logitech International SA on September 12, 2024 and sell it today you would earn a total of 1,787 from holding Logitech International SA or generate 31.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Logitech International SA vs. Emmi AG
Performance |
| Timeline |
| Logitech International |
| Emmi AG |
Logitech International and Emmi AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Logitech International and Emmi AG
The main advantage of trading using opposite Logitech International and Emmi AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Logitech International 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.| Logitech International vs. Geberit AG | Logitech International vs. Sika AG | Logitech International vs. Lonza Group AG | Logitech International vs. Swiss Life Holding |
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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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