Correlation Between BELIMO Holding and Quanex Building
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
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 97.5% |
Values | Daily Returns |
BELIMO Holding AG vs. Quanex Building Products
Performance |
Timeline |
BELIMO Holding AG |
Quanex Building Products |
BELIMO Holding and Quanex Building Volatility Contrast
Predicted Return Density |
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.BELIMO Holding vs. Geberit AG ADR | ||
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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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