Correlation Between Burckhardt Compression and Schindler Holding

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

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

Diversification Opportunities for Burckhardt Compression and Schindler Holding

0.89

Correlation Coefficient

Burckhardt Compression  Schindler Holding

Very poor diversification

The 3 months correlation between Burckhardt and Schindler is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Burckhardt Compression and Schindler Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schindler Holding and Burckhardt Compression 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 Burckhardt Compression are associated (or correlated) with Schindler Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schindler Holding has no effect on the direction of Burckhardt Compression i.e., Burckhardt Compression and Schindler Holding go up and down completely randomly.

Pair Corralation between Burckhardt Compression and Schindler Holding

Assuming the 90 days trading horizon Burckhardt Compression is expected to generate 1.39 times more return on investment than Schindler Holding. However, Burckhardt Compression is 1.39 times more volatile than Schindler Holding AG. It trades about 0.15 of its potential returns per unit of risk. Schindler Holding AG is currently generating about 0.13 per unit of risk. If you would invest  58,400  in Burckhardt Compression on September 14, 2024 and sell it today you would earn a total of  7,900  from holding Burckhardt Compression or generate 13.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Burckhardt Compression  vs.  Schindler Holding AG

Burckhardt Compression

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Burckhardt Compression are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Burckhardt Compression showed solid returns over the last few months and may actually be approaching a breakup point.

Schindler Holding

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schindler Holding AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Schindler Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Burckhardt Compression and Schindler Holding

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

The idea behind Burckhardt Compression and Schindler 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.