Correlation Between Chargeurs and Straumann Holding

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

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

Diversification Opportunities for Chargeurs and Straumann Holding

0.61

Correlation Coefficient

Chargeurs  Straumann Holding

Poor diversification

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

Pair Corralation between Chargeurs and Straumann Holding

Assuming the 90 days trading horizon Chargeurs SA is expected to generate 1.17 times more return on investment than Straumann Holding. However, Chargeurs is 1.17 times more volatile than Straumann Holding AG. It trades about 0.18 of its potential returns per unit of risk. Straumann Holding AG is currently generating about 0.07 per unit of risk. If you would invest  981.00  in Chargeurs SA on November 30, 2024 and sell it today you would earn a total of  217.00  from holding Chargeurs SA or generate 22.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.16%
Values	Daily Returns

Chargeurs SA  vs.  Straumann Holding AG

Chargeurs SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chargeurs SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Chargeurs sustained solid returns over the last few months and may actually be approaching a breakup point.

Straumann Holding

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Straumann Holding AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Straumann Holding may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Chargeurs and Straumann Holding

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

The idea behind Chargeurs SA and Straumann 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.