Correlation Between Arbonia AG and Belimo Holding

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

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

Diversification Opportunities for Arbonia AG and Belimo Holding

0.56

Correlation Coefficient

Arbonia AG  Belimo Holding

Very weak diversification

The 3 months correlation between Arbonia and Belimo is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Arbonia AG and Belimo Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belimo Holding and Arbonia 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 Arbonia AG are associated (or correlated) with Belimo Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belimo Holding has no effect on the direction of Arbonia AG i.e., Arbonia AG and Belimo Holding go up and down completely randomly.

Pair Corralation between Arbonia AG and Belimo Holding

Assuming the 90 days trading horizon Arbonia AG is expected to generate 1.81 times less return on investment than Belimo Holding. But when comparing it to its historical volatility, Arbonia AG is 1.06 times less risky than Belimo Holding. It trades about 0.1 of its potential returns per unit of risk. Belimo Holding is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  56,650  in Belimo Holding on November 19, 2024 and sell it today you would earn a total of  11,000  from holding Belimo Holding or generate 19.42% return on investment over 90 days.

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

Arbonia AG  vs.  Belimo Holding

Arbonia AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arbonia AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arbonia AG may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Belimo Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Belimo Holding are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Belimo Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arbonia AG and Belimo Holding

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

The idea behind Arbonia AG and Belimo Holding 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.