Correlation Between Baloise Holding and MULTI UNITS

Can any of the company-specific risk be diversified away by investing in both Baloise Holding and MULTI UNITS 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 MULTI UNITS 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 MULTI UNITS LUXEMBOURG , you can compare the effects of market volatilities on Baloise Holding and MULTI UNITS 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 MULTI UNITS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baloise Holding and MULTI UNITS.

Diversification Opportunities for Baloise Holding and MULTI UNITS

0.76

Correlation Coefficient

Baloise Holding  MULTI UNITS

Poor diversification

The 3 months correlation between Baloise and MULTI is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG and MULTI UNITS LUXEMBOURG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MULTI UNITS LUXEMBOURG 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 MULTI UNITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MULTI UNITS LUXEMBOURG has no effect on the direction of Baloise Holding i.e., Baloise Holding and MULTI UNITS go up and down completely randomly.

Pair Corralation between Baloise Holding and MULTI UNITS

Assuming the 90 days trading horizon Baloise Holding AG is expected to generate 0.92 times more return on investment than MULTI UNITS. However, Baloise Holding AG is 1.09 times less risky than MULTI UNITS. It trades about 0.25 of its potential returns per unit of risk. MULTI UNITS LUXEMBOURG is currently generating about 0.21 per unit of risk. If you would invest  16,410  in Baloise Holding AG on December 28, 2024 and sell it today you would earn a total of  2,770  from holding Baloise Holding AG or generate 16.88% return on investment over 90 days.

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

Baloise Holding AG  vs.  MULTI UNITS LUXEMBOURG

Baloise Holding AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baloise Holding AG are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Baloise Holding showed solid returns over the last few months and may actually be approaching a breakup point.

MULTI UNITS LUXEMBOURG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MULTI UNITS LUXEMBOURG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, MULTI UNITS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baloise Holding and MULTI UNITS

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

The idea behind Baloise Holding AG and MULTI UNITS LUXEMBOURG 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.