Correlation Between Zehnder and EMS CHEMIE
Can any of the company-specific risk be diversified away by investing in both Zehnder 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 Zehnder and EMS CHEMIE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zehnder and EMS CHEMIE HOLDING AG, you can compare the effects of market volatilities on Zehnder 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 Zehnder with a short position of EMS CHEMIE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zehnder and EMS CHEMIE.
Diversification Opportunities for Zehnder and EMS CHEMIE
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zehnder and EMS is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Zehnder 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 Zehnder 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 Zehnder 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 Zehnder i.e., Zehnder and EMS CHEMIE go up and down completely randomly.
Pair Corralation between Zehnder and EMS CHEMIE
Assuming the 90 days trading horizon Zehnder is expected to generate 1.8 times more return on investment than EMS CHEMIE. However, Zehnder is 1.8 times more volatile than EMS CHEMIE HOLDING AG. It trades about 0.01 of its potential returns per unit of risk. EMS CHEMIE HOLDING AG is currently generating about 0.0 per unit of risk. If you would invest 4,515 in Zehnder on September 2, 2024 and sell it today you would earn a total of 80.00 from holding Zehnder or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zehnder vs. EMS CHEMIE HOLDING AG
Performance |
| Timeline |
| Zehnder |
| EMS CHEMIE HOLDING |
Zehnder and EMS CHEMIE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zehnder and EMS CHEMIE
The main advantage of trading using opposite Zehnder and EMS CHEMIE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zehnder 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.| Zehnder vs. Comet Holding AG | Zehnder vs. Schweiter Technologies AG | Zehnder vs. Bossard Holding AG | Zehnder vs. Bachem Holding 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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