Correlation Between Straumann Holding and SMC Corp
Can any of the company-specific risk be diversified away by investing in both Straumann Holding and SMC Corp 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 Straumann Holding and SMC Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Straumann Holding AG and SMC Corp, you can compare the effects of market volatilities on Straumann Holding and SMC Corp 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 Straumann Holding with a short position of SMC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Straumann Holding and SMC Corp.
Diversification Opportunities for Straumann Holding and SMC Corp
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Straumann and SMC is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Straumann Holding AG and SMC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Corp and Straumann 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 Straumann Holding AG are associated (or correlated) with SMC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Corp has no effect on the direction of Straumann Holding i.e., Straumann Holding and SMC Corp go up and down completely randomly.
Pair Corralation between Straumann Holding and SMC Corp
Assuming the 90 days horizon Straumann Holding AG is expected to generate 0.61 times more return on investment than SMC Corp. However, Straumann Holding AG is 1.63 times less risky than SMC Corp. It trades about 0.27 of its potential returns per unit of risk. SMC Corp is currently generating about -0.13 per unit of risk. If you would invest 12,351 in Straumann Holding AG on November 9, 2024 and sell it today you would earn a total of 1,275 from holding Straumann Holding AG or generate 10.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Straumann Holding AG vs. SMC Corp
Performance |
| Timeline |
| Straumann Holding |
| SMC Corp |
Straumann Holding and SMC Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Straumann Holding and SMC Corp
The main advantage of trading using opposite Straumann Holding and SMC Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Straumann Holding position performs unexpectedly, SMC Corp 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 SMC Corp will offset losses from the drop in SMC Corp's long position.| Straumann Holding vs. Sysmex Corp | Straumann Holding vs. Straumann Holding AG | Straumann Holding vs. Coloplast AS | Straumann Holding vs. Essilor International 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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