Correlation Between BELIMO Holding and Quanex Building

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Can any of the company-specific risk be diversified away by investing in both BELIMO Holding and Quanex Building 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 Quanex Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BELIMO Holding AG and Quanex Building Products, you can compare the effects of market volatilities on BELIMO Holding and Quanex Building 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 Quanex Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of BELIMO Holding and Quanex Building.

Diversification Opportunities for BELIMO Holding and Quanex Building

BELIMOQuanexDiversified AwayBELIMOQuanexDiversified Away100%
0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between BELIMO and Quanex is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding BELIMO Holding AG and Quanex Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanex Building Products 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 AG are associated (or correlated) with Quanex Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanex Building Products has no effect on the direction of BELIMO Holding i.e., BELIMO Holding and Quanex Building go up and down completely randomly.

Pair Corralation between BELIMO Holding and Quanex Building

Assuming the 90 days horizon BELIMO Holding AG is expected to generate 0.24 times more return on investment than Quanex Building. However, BELIMO Holding AG is 4.21 times less risky than Quanex Building. It trades about -0.16 of its potential returns per unit of risk. Quanex Building Products is currently generating about -0.23 per unit of risk. If you would invest  70,900  in BELIMO Holding AG on October 9, 2024 and sell it today you would lose (3,028) from holding BELIMO Holding AG or give up 4.27% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy97.5%
ValuesDaily Returns

BELIMO Holding AG  vs.  Quanex Building Products

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -15-10-5051015
JavaScript chart by amCharts 3.21.15BLHWF NX
       Timeline  
BELIMO Holding AG 

Risk-Adjusted Performance

0 of 100

 
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Very Weak
Over the last 90 days BELIMO Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BELIMO Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan600620640660680700
Quanex Building Products 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Quanex Building Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan23242526272829303132

BELIMO Holding and Quanex Building Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.86-0.62-0.38-0.14-0.03310.04490.160.40.640.88 0.20.40.60.81.01.21.4
JavaScript chart by amCharts 3.21.15BLHWF NX
       Returns  

Pair Trading with BELIMO Holding and Quanex Building

The main advantage of trading using opposite BELIMO Holding and Quanex Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BELIMO Holding position performs unexpectedly, Quanex Building 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 Quanex Building will offset losses from the drop in Quanex Building's long position.
The idea behind BELIMO Holding AG and Quanex Building Products 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.
Check out your portfolio center.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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