Correlation Between Aumann AG and Schneider Electric

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

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

Diversification Opportunities for Aumann AG and Schneider Electric

-0.12

Correlation Coefficient

Aumann AG  Schneider Electric

Good diversification

The 3 months correlation between Aumann and Schneider is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aumann AG and Schneider Electric SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and Aumann 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 Aumann AG are associated (or correlated) with Schneider Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schneider Electric has no effect on the direction of Aumann AG i.e., Aumann AG and Schneider Electric go up and down completely randomly.

Pair Corralation between Aumann AG and Schneider Electric

Assuming the 90 days horizon Aumann AG is expected to generate 2.99 times less return on investment than Schneider Electric. In addition to that, Aumann AG is 1.44 times more volatile than Schneider Electric SE. It trades about 0.02 of its total potential returns per unit of risk. Schneider Electric SE is currently generating about 0.07 per unit of volatility. If you would invest  14,431  in Schneider Electric SE on September 3, 2024 and sell it today you would earn a total of  11,169  from holding Schneider Electric SE or generate 77.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	62.63%
Values	Daily Returns

Aumann AG  vs.  Schneider Electric SE

Aumann AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aumann AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Schneider Electric

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Schneider Electric SE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Schneider Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aumann AG and Schneider Electric

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

The idea behind Aumann AG and Schneider Electric SE 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..