Correlation Between Belimo Holding and Vontobel Holding

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

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

Diversification Opportunities for Belimo Holding and Vontobel Holding

0.71

Correlation Coefficient

Belimo Holding  Vontobel Holding

Poor diversification

The 3 months correlation between Belimo and Vontobel is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Belimo Holding and Vontobel Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vontobel Holding and Belimo 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 Belimo Holding are associated (or correlated) with Vontobel Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vontobel Holding has no effect on the direction of Belimo Holding i.e., Belimo Holding and Vontobel Holding go up and down completely randomly.

Pair Corralation between Belimo Holding and Vontobel Holding

Assuming the 90 days trading horizon Belimo Holding is expected to under-perform the Vontobel Holding. In addition to that, Belimo Holding is 1.64 times more volatile than Vontobel Holding. It trades about -0.03 of its total potential returns per unit of risk. Vontobel Holding is currently generating about 0.02 per unit of volatility. If you would invest  6,330  in Vontobel Holding on December 23, 2024 and sell it today you would earn a total of  70.00  from holding Vontobel Holding or generate 1.11% return on investment over 90 days.

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

Belimo Holding  vs.  Vontobel Holding

Belimo Holding

Risk-Adjusted Performance

Very Weak

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

Vontobel Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vontobel Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Vontobel 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 Belimo Holding and Vontobel Holding

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

The idea behind Belimo Holding and Vontobel Holding 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.