Correlation Between Baloise Holding and Komax Holding

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

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

Diversification Opportunities for Baloise Holding and Komax Holding

0.22

Correlation Coefficient

Baloise Holding  Komax Holding

Modest diversification

The 3 months correlation between Baloise and Komax is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG and Komax Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komax Holding AG and Baloise 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 Baloise Holding AG are associated (or correlated) with Komax Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komax Holding AG has no effect on the direction of Baloise Holding i.e., Baloise Holding and Komax Holding go up and down completely randomly.

Pair Corralation between Baloise Holding and Komax Holding

Assuming the 90 days trading horizon Baloise Holding is expected to generate 2.58 times less return on investment than Komax Holding. But when comparing it to its historical volatility, Baloise Holding AG is 2.9 times less risky than Komax Holding. It trades about 0.09 of its potential returns per unit of risk. Komax Holding AG is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  11,300  in Komax Holding AG on October 5, 2024 and sell it today you would earn a total of  260.00  from holding Komax Holding AG or generate 2.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Baloise Holding AG  vs.  Komax Holding AG

Baloise Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Komax Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Komax Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Komax Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Baloise Holding and Komax Holding

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

The idea behind Baloise Holding AG and Komax 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.