Correlation Between Roche Holding and Rieter Holding
Can any of the company-specific risk be diversified away by investing in both Roche Holding and Rieter Holding 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 Roche Holding and Rieter Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roche Holding AG and Rieter Holding AG, you can compare the effects of market volatilities on Roche Holding and Rieter Holding 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 Roche Holding with a short position of Rieter Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roche Holding and Rieter Holding.
Diversification Opportunities for Roche Holding and Rieter Holding
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Roche and Rieter is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Roche Holding AG and Rieter Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rieter Holding AG and Roche 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 Roche Holding AG are associated (or correlated) with Rieter Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rieter Holding AG has no effect on the direction of Roche Holding i.e., Roche Holding and Rieter Holding go up and down completely randomly.
Pair Corralation between Roche Holding and Rieter Holding
Assuming the 90 days horizon Roche Holding AG is expected to generate 0.62 times more return on investment than Rieter Holding. However, Roche Holding AG is 1.61 times less risky than Rieter Holding. It trades about 0.1 of its potential returns per unit of risk. Rieter Holding AG is currently generating about -0.04 per unit of risk. If you would invest 28,500 in Roche Holding AG on November 8, 2024 and sell it today you would earn a total of 2,120 from holding Roche Holding AG or generate 7.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roche Holding AG vs. Rieter Holding AG
Performance |
| Timeline |
| Roche Holding AG |
| Rieter Holding AG |
Roche Holding and Rieter Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roche Holding and Rieter Holding
The main advantage of trading using opposite Roche Holding and Rieter Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roche Holding position performs unexpectedly, Rieter Holding 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 Rieter Holding will offset losses from the drop in Rieter Holding's long position.| Roche Holding vs. Novartis AG | Roche Holding vs. Zurich Insurance Group | Roche Holding vs. Nestl SA | Roche Holding vs. Lonza Group AG |
| Rieter Holding vs. Autoneum Holding AG | Rieter Holding vs. Sulzer AG | Rieter Holding vs. OC Oerlikon Corp | Rieter Holding vs. Bucher Industries 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 Stocks Directory module to find actively traded stocks across global markets.
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