Correlation Between Swiss Leader and EMS CHEMIE
Can any of the company-specific risk be diversified away by investing in both Swiss Leader and EMS CHEMIE 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 Swiss Leader and EMS CHEMIE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Leader Price and EMS CHEMIE HOLDING AG, you can compare the effects of market volatilities on Swiss Leader and EMS CHEMIE 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 Swiss Leader with a short position of EMS CHEMIE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Leader and EMS CHEMIE.
Diversification Opportunities for Swiss Leader and EMS CHEMIE
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Swiss and EMS is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price and EMS CHEMIE HOLDING AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMS CHEMIE HOLDING and Swiss Leader 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 Swiss Leader Price are associated (or correlated) with EMS CHEMIE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMS CHEMIE HOLDING has no effect on the direction of Swiss Leader i.e., Swiss Leader and EMS CHEMIE go up and down completely randomly.
Pair Corralation between Swiss Leader and EMS CHEMIE
Assuming the 90 days trading horizon Swiss Leader Price is expected to generate 0.69 times more return on investment than EMS CHEMIE. However, Swiss Leader Price is 1.45 times less risky than EMS CHEMIE. It trades about -0.01 of its potential returns per unit of risk. EMS CHEMIE HOLDING AG is currently generating about -0.1 per unit of risk. If you would invest 195,500 in Swiss Leader Price on August 29, 2024 and sell it today you would lose (3,522) from holding Swiss Leader Price or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.22% |
| Values | Daily Returns |
Swiss Leader Price vs. EMS CHEMIE HOLDING AG
Performance |
| Timeline |
Swiss Leader and EMS CHEMIE Volatility Contrast
Predicted Return Density |
| Returns |
Swiss Leader Price
Pair trading matchups for Swiss Leader
EMS CHEMIE HOLDING AG
Pair trading matchups for EMS CHEMIE
Pair Trading with Swiss Leader and EMS CHEMIE
The main advantage of trading using opposite Swiss Leader and EMS CHEMIE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Leader position performs unexpectedly, EMS CHEMIE 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 EMS CHEMIE will offset losses from the drop in EMS CHEMIE's long position.| Swiss Leader vs. Liechtensteinische Landesbank AG | Swiss Leader vs. BB Biotech AG | Swiss Leader vs. Luzerner Kantonalbank AG | Swiss Leader vs. Swiss Steel Holding |
| EMS CHEMIE vs. Geberit AG | EMS CHEMIE vs. Lonza Group AG | EMS CHEMIE vs. SGS SA | EMS CHEMIE vs. Swiss Life 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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