Correlation Between Ams AG and Emmi AG

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

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

Diversification Opportunities for Ams AG and Emmi AG

0.86

Correlation Coefficient

Ams AG  Emmi AG

Very poor diversification

The 3 months correlation between Ams and Emmi is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ams AG and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG and Ams 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 Ams 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 Ams AG i.e., Ams AG and Emmi AG go up and down completely randomly.

Pair Corralation between Ams AG and Emmi AG

Assuming the 90 days trading horizon Ams AG is expected to generate 5.11 times more return on investment than Emmi AG. However, Ams AG is 5.11 times more volatile than Emmi AG. It trades about -0.05 of its potential returns per unit of risk. Emmi AG is currently generating about -0.27 per unit of risk. If you would invest  858.00  in Ams AG on September 12, 2024 and sell it today you would lose (165.00) from holding Ams AG or give up 19.23% of portfolio value over 90 days.

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

Ams AG  vs.  Emmi AG

Ams AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ams AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated 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. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ams AG and Emmi AG

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

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.