Correlation Between Basler Kantonalbank and EMS CHEMIE

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

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

Diversification Opportunities for Basler Kantonalbank and EMS CHEMIE

-0.61

Correlation Coefficient

Basler Kantonalbank  EMS CHEMIE

Excellent diversification

The 3 months correlation between Basler and EMS is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Basler Kantonalbank and EMS CHEMIE HOLDING AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMS CHEMIE HOLDING and Basler Kantonalbank 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 Basler Kantonalbank are associated (or correlated) with EMS CHEMIE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMS CHEMIE HOLDING has no effect on the direction of Basler Kantonalbank i.e., Basler Kantonalbank and EMS CHEMIE go up and down completely randomly.

Pair Corralation between Basler Kantonalbank and EMS CHEMIE

Assuming the 90 days trading horizon Basler Kantonalbank is expected to generate 0.98 times more return on investment than EMS CHEMIE. However, Basler Kantonalbank is 1.02 times less risky than EMS CHEMIE. It trades about 0.38 of its potential returns per unit of risk. EMS CHEMIE HOLDING AG is currently generating about 0.31 per unit of risk. If you would invest  6,800  in Basler Kantonalbank on October 22, 2024 and sell it today you would earn a total of  320.00  from holding Basler Kantonalbank or generate 4.71% return on investment over 90 days.

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

Basler Kantonalbank  vs.  EMS CHEMIE HOLDING AG

Basler Kantonalbank

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Basler Kantonalbank are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Basler Kantonalbank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

EMS CHEMIE HOLDING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMS CHEMIE HOLDING AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Basler Kantonalbank and EMS CHEMIE

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

The idea behind Basler Kantonalbank and EMS CHEMIE 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.