Correlation Between UBS Group and Emmi AG
Can any of the company-specific risk be diversified away by investing in both UBS Group and Emmi AG 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 UBS Group and Emmi AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS Group AG and Emmi AG, you can compare the effects of market volatilities on UBS Group and Emmi AG 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 UBS Group with a short position of Emmi AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Group and Emmi AG.
Diversification Opportunities for UBS Group and Emmi AG
Excellent diversification
The 3 months correlation between UBS and Emmi is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group AG and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG and UBS Group 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 UBS Group AG are associated (or correlated) with Emmi AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emmi AG has no effect on the direction of UBS Group i.e., UBS Group and Emmi AG go up and down completely randomly.
Pair Corralation between UBS Group and Emmi AG
Assuming the 90 days trading horizon UBS Group AG is expected to generate 1.66 times more return on investment than Emmi AG. However, UBS Group is 1.66 times more volatile than Emmi AG. It trades about 0.03 of its potential returns per unit of risk. Emmi AG is currently generating about -0.32 per unit of risk. If you would invest 2,806 in UBS Group AG on August 28, 2024 and sell it today you would earn a total of 29.00 from holding UBS Group AG or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS Group AG vs. Emmi AG
Performance |
| Timeline |
| UBS Group AG |
| Emmi AG |
UBS Group and Emmi AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS Group and Emmi AG
The main advantage of trading using opposite UBS Group and Emmi AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Group position performs unexpectedly, Emmi AG 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 Emmi AG will offset losses from the drop in Emmi AG's long position.| UBS Group vs. Zurich Insurance Group | UBS Group vs. Novartis AG | UBS Group vs. Swiss Re AG | UBS Group vs. ABB |
| Emmi AG vs. Santhera Pharmaceuticals Holding | Emmi AG vs. Newron Pharmaceuticals SpA | Emmi AG vs. Basilea Pharmaceutica AG | Emmi AG vs. Evolva Holding 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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