Correlation Between Birkenstock Holding and On Holding

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

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

Diversification Opportunities for Birkenstock Holding and On Holding

0.92

Correlation Coefficient

Birkenstock Holding  On Holding

Almost no diversification

The 3 months correlation between Birkenstock and ONON is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Birkenstock Holding plc and On Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on On Holding and Birkenstock 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 Birkenstock Holding plc are associated (or correlated) with On Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of On Holding has no effect on the direction of Birkenstock Holding i.e., Birkenstock Holding and On Holding go up and down completely randomly.

Pair Corralation between Birkenstock Holding and On Holding

Given the investment horizon of 90 days Birkenstock Holding plc is expected to under-perform the On Holding. But the stock apears to be less risky and, when comparing its historical volatility, Birkenstock Holding plc is 1.24 times less risky than On Holding. The stock trades about -0.14 of its potential returns per unit of risk. The On Holding is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  5,519  in On Holding on December 29, 2024 and sell it today you would lose (1,104) from holding On Holding or give up 20.0% of portfolio value over 90 days.

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

Birkenstock Holding plc  vs.  On Holding

Birkenstock Holding plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Birkenstock Holding plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

On Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days On Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Birkenstock Holding and On Holding

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

The idea behind Birkenstock Holding plc and On 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.