Correlation Between Dorma Kaba and Ypsomed Holding

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

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

Diversification Opportunities for Dorma Kaba and Ypsomed Holding

0.52

Correlation Coefficient

Dorma Kaba  Ypsomed Holding

Very weak diversification

The 3 months correlation between Dorma and Ypsomed is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dorma Kaba Holding and Ypsomed Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ypsomed Holding AG and Dorma Kaba 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 Dorma Kaba Holding are associated (or correlated) with Ypsomed Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ypsomed Holding AG has no effect on the direction of Dorma Kaba i.e., Dorma Kaba and Ypsomed Holding go up and down completely randomly.

Pair Corralation between Dorma Kaba and Ypsomed Holding

Assuming the 90 days trading horizon Dorma Kaba Holding is expected to under-perform the Ypsomed Holding. But the stock apears to be less risky and, when comparing its historical volatility, Dorma Kaba Holding is 1.21 times less risky than Ypsomed Holding. The stock trades about -0.03 of its potential returns per unit of risk. The Ypsomed Holding AG is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  36,900  in Ypsomed Holding AG on December 5, 2024 and sell it today you would lose (550.00) from holding Ypsomed Holding AG or give up 1.49% of portfolio value over 90 days.

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

Dorma Kaba Holding  vs.  Ypsomed Holding AG

Dorma Kaba Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dorma Kaba Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Dorma Kaba is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ypsomed Holding AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ypsomed Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ypsomed Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Dorma Kaba and Ypsomed Holding

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

The idea behind Dorma Kaba Holding and Ypsomed 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.