Correlation Between Ajinomoto and Emmi AG

Can any of the company-specific risk be diversified away by investing in both Ajinomoto 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 Ajinomoto and Emmi AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ajinomoto Co ADR and Emmi AG, you can compare the effects of market volatilities on Ajinomoto 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 Ajinomoto with a short position of Emmi AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ajinomoto and Emmi AG.

Diversification Opportunities for Ajinomoto and Emmi AG

-0.31

Correlation Coefficient

Ajinomoto  Emmi AG

Very good diversification

The 3 months correlation between Ajinomoto and Emmi is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ajinomoto Co ADR and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG and Ajinomoto 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 Ajinomoto Co ADR 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 Ajinomoto i.e., Ajinomoto and Emmi AG go up and down completely randomly.

Pair Corralation between Ajinomoto and Emmi AG

If you would invest  99,000  in Emmi AG on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Emmi AG or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ajinomoto Co ADR  vs.  Emmi AG

Ajinomoto Co ADR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ajinomoto Co ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Ajinomoto is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Emmi AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emmi AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Emmi AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ajinomoto and Emmi AG

The main advantage of trading using opposite Ajinomoto and Emmi AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ajinomoto 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.

The idea behind Ajinomoto Co ADR and Emmi AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.