Correlation Between Sulzer AG and Schlatter Industries
Can any of the company-specific risk be diversified away by investing in both Sulzer AG and Schlatter Industries 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 Sulzer AG and Schlatter Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sulzer AG and Schlatter Industries AG, you can compare the effects of market volatilities on Sulzer AG and Schlatter Industries 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 Sulzer AG with a short position of Schlatter Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sulzer AG and Schlatter Industries.
Diversification Opportunities for Sulzer AG and Schlatter Industries
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sulzer and Schlatter is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sulzer AG and Schlatter Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlatter Industries and Sulzer 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 Sulzer AG are associated (or correlated) with Schlatter Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlatter Industries has no effect on the direction of Sulzer AG i.e., Sulzer AG and Schlatter Industries go up and down completely randomly.
Pair Corralation between Sulzer AG and Schlatter Industries
Assuming the 90 days trading horizon Sulzer AG is expected to generate 0.44 times more return on investment than Schlatter Industries. However, Sulzer AG is 2.29 times less risky than Schlatter Industries. It trades about 0.09 of its potential returns per unit of risk. Schlatter Industries AG is currently generating about 0.01 per unit of risk. If you would invest 8,342 in Sulzer AG on September 12, 2024 and sell it today you would earn a total of 4,618 from holding Sulzer AG or generate 55.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 75.3% |
| Values | Daily Returns |
Sulzer AG vs. Schlatter Industries AG
Performance |
| Timeline |
| Sulzer AG |
| Schlatter Industries |
Sulzer AG and Schlatter Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sulzer AG and Schlatter Industries
The main advantage of trading using opposite Sulzer AG and Schlatter Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sulzer AG position performs unexpectedly, Schlatter Industries 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 Schlatter Industries will offset losses from the drop in Schlatter Industries' long position.| Sulzer AG vs. OC Oerlikon Corp | Sulzer AG vs. Helvetia Holding AG | Sulzer AG vs. Swiss Life Holding | Sulzer AG vs. VAT Group AG |
| Schlatter Industries vs. Sulzer AG | Schlatter Industries vs. Helvetia Holding AG | Schlatter Industries vs. Swiss Life Holding | Schlatter Industries vs. Adecco Group 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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