Correlation Between Mikron Holding and Emmi AG
Can any of the company-specific risk be diversified away by investing in both Mikron Holding 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 Mikron Holding and Emmi AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mikron Holding AG and Emmi AG, you can compare the effects of market volatilities on Mikron Holding 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 Mikron Holding with a short position of Emmi AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mikron Holding and Emmi AG.
Diversification Opportunities for Mikron Holding and Emmi AG
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mikron and Emmi is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mikron Holding AG and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG and Mikron Holding 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 Mikron Holding 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 Mikron Holding i.e., Mikron Holding and Emmi AG go up and down completely randomly.
Pair Corralation between Mikron Holding and Emmi AG
Assuming the 90 days trading horizon Mikron Holding AG is expected to under-perform the Emmi AG. In addition to that, Mikron Holding is 1.91 times more volatile than Emmi AG. It trades about -0.11 of its total potential returns per unit of risk. Emmi AG is currently generating about -0.11 per unit of volatility. If you would invest 88,600 in Emmi AG on September 3, 2024 and sell it today you would lose (11,500) from holding Emmi AG or give up 12.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mikron Holding AG vs. Emmi AG
Performance |
| Timeline |
| Mikron Holding AG |
| Emmi AG |
Mikron Holding and Emmi AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mikron Holding and Emmi AG
The main advantage of trading using opposite Mikron Holding and Emmi AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mikron Holding 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.| Mikron Holding vs. Emmi AG | Mikron Holding vs. EMS CHEMIE HOLDING AG | Mikron Holding vs. Barry Callebaut AG | Mikron Holding vs. VAT Group AG |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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