Correlation Between Sika AG and Forbo Holding
Can any of the company-specific risk be diversified away by investing in both Sika AG and Forbo 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 Sika AG and Forbo Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sika AG and Forbo Holding AG, you can compare the effects of market volatilities on Sika AG and Forbo 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 Sika AG with a short position of Forbo Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sika AG and Forbo Holding.
Diversification Opportunities for Sika AG and Forbo Holding
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sika and Forbo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sika AG and Forbo Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forbo Holding AG and Sika 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 Sika AG are associated (or correlated) with Forbo Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forbo Holding AG has no effect on the direction of Sika AG i.e., Sika AG and Forbo Holding go up and down completely randomly.
Pair Corralation between Sika AG and Forbo Holding
Assuming the 90 days trading horizon Sika AG is expected to generate 1.07 times more return on investment than Forbo Holding. However, Sika AG is 1.07 times more volatile than Forbo Holding AG. It trades about 0.0 of its potential returns per unit of risk. Forbo Holding AG is currently generating about -0.03 per unit of risk. If you would invest 23,856 in Sika AG on September 3, 2024 and sell it today you would lose (1,046) from holding Sika AG or give up 4.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sika AG vs. Forbo Holding AG
Performance |
| Timeline |
| Sika AG |
| Forbo Holding AG |
Sika AG and Forbo Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sika AG and Forbo Holding
The main advantage of trading using opposite Sika AG and Forbo Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sika AG position performs unexpectedly, Forbo 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 Forbo Holding will offset losses from the drop in Forbo Holding's long position.| Sika AG vs. Lonza Group AG | Sika AG vs. Givaudan SA | Sika AG vs. Geberit AG | Sika AG vs. Partners Group Holding |
| Forbo Holding vs. Bucher Industries AG | Forbo Holding vs. Interroll Holding AG | Forbo Holding vs. Emmi AG | Forbo Holding vs. Belimo Holding |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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