Correlation Between Autoneum Holding and GOOD BUILDINGS

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

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

Diversification Opportunities for Autoneum Holding and GOOD BUILDINGS

0.27

Correlation Coefficient

Autoneum Holding  GOOD BUILDINGS

Modest diversification

The 3 months correlation between Autoneum and GOOD is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Autoneum Holding AG and GOOD BUILDINGS Swiss in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOOD BUILDINGS Swiss and Autoneum Holding 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 Autoneum Holding AG are associated (or correlated) with GOOD BUILDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOOD BUILDINGS Swiss has no effect on the direction of Autoneum Holding i.e., Autoneum Holding and GOOD BUILDINGS go up and down completely randomly.

Pair Corralation between Autoneum Holding and GOOD BUILDINGS

Assuming the 90 days trading horizon Autoneum Holding is expected to generate 1.43 times less return on investment than GOOD BUILDINGS. In addition to that, Autoneum Holding is 2.96 times more volatile than GOOD BUILDINGS Swiss. It trades about 0.02 of its total potential returns per unit of risk. GOOD BUILDINGS Swiss is currently generating about 0.07 per unit of volatility. If you would invest  12,982  in GOOD BUILDINGS Swiss on October 5, 2024 and sell it today you would earn a total of  2,718  from holding GOOD BUILDINGS Swiss or generate 20.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.89%
Values	Daily Returns

Autoneum Holding AG  vs.  GOOD BUILDINGS Swiss

Autoneum Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Autoneum Holding AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Autoneum Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GOOD BUILDINGS Swiss

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GOOD BUILDINGS Swiss has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable basic indicators, GOOD BUILDINGS is not utilizing all of its potentials. The new stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Autoneum Holding and GOOD BUILDINGS

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

The idea behind Autoneum Holding AG and GOOD BUILDINGS Swiss 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 Transaction History module to view history of all your transactions and understand their impact on performance.