Correlation Between Ansell and Straumann Holding

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

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

Diversification Opportunities for Ansell and Straumann Holding

-0.05

Correlation Coefficient

Ansell  Straumann Holding

Good diversification

The 3 months correlation between Ansell and Straumann is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ansell Limited and Straumann Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Straumann Holding and Ansell 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 Ansell Limited are associated (or correlated) with Straumann Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Straumann Holding has no effect on the direction of Ansell i.e., Ansell and Straumann Holding go up and down completely randomly.

Pair Corralation between Ansell and Straumann Holding

Assuming the 90 days horizon Ansell is expected to generate 1.45 times less return on investment than Straumann Holding. In addition to that, Ansell is 1.02 times more volatile than Straumann Holding AG. It trades about 0.02 of its total potential returns per unit of risk. Straumann Holding AG is currently generating about 0.03 per unit of volatility. If you would invest  1,079  in Straumann Holding AG on September 10, 2024 and sell it today you would earn a total of  244.00  from holding Straumann Holding AG or generate 22.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.79%
Values	Daily Returns

Ansell Limited  vs.  Straumann Holding AG

Ansell Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ansell Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Ansell reported solid returns over the last few months and may actually be approaching a breakup point.

Straumann Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Straumann Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Straumann Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ansell and Straumann Holding

The main advantage of trading using opposite Ansell and Straumann Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ansell position performs unexpectedly, Straumann Holding 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 Straumann Holding will offset losses from the drop in Straumann Holding's long position.

The idea behind Ansell Limited and Straumann Holding 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.