Correlation Between Bossard Holding and Autoneum Holding

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

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

Diversification Opportunities for Bossard Holding and Autoneum Holding

0.66

Correlation Coefficient

Bossard Holding  Autoneum Holding

Poor diversification

The 3 months correlation between Bossard and Autoneum is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bossard Holding AG and Autoneum Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoneum Holding and Bossard 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 Bossard Holding AG are associated (or correlated) with Autoneum Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autoneum Holding has no effect on the direction of Bossard Holding i.e., Bossard Holding and Autoneum Holding go up and down completely randomly.

Pair Corralation between Bossard Holding and Autoneum Holding

Assuming the 90 days trading horizon Bossard Holding is expected to generate 7.19 times less return on investment than Autoneum Holding. But when comparing it to its historical volatility, Bossard Holding AG is 1.06 times less risky than Autoneum Holding. It trades about 0.02 of its potential returns per unit of risk. Autoneum Holding AG is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  10,800  in Autoneum Holding AG on December 5, 2024 and sell it today you would earn a total of  1,720  from holding Autoneum Holding AG or generate 15.93% return on investment over 90 days.

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

Bossard Holding AG  vs.  Autoneum Holding AG

Bossard Holding AG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bossard Holding AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Bossard Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Autoneum Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Autoneum Holding AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Autoneum Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bossard Holding and Autoneum Holding

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

The idea behind Bossard Holding AG and Autoneum 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.