Correlation Between Emmi AG and Kikkoman Corp

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

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

Diversification Opportunities for Emmi AG and Kikkoman Corp

0.79

Correlation Coefficient

Emmi AG  Kikkoman Corp

Poor diversification

The 3 months correlation between Emmi and Kikkoman is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Emmi AG and Kikkoman Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kikkoman Corp ADR and Emmi AG 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 Emmi AG are associated (or correlated) with Kikkoman Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kikkoman Corp ADR has no effect on the direction of Emmi AG i.e., Emmi AG and Kikkoman Corp go up and down completely randomly.

Pair Corralation between Emmi AG and Kikkoman Corp

Assuming the 90 days horizon Emmi AG is expected to generate 0.42 times more return on investment than Kikkoman Corp. However, Emmi AG is 2.39 times less risky than Kikkoman Corp. It trades about -0.13 of its potential returns per unit of risk. Kikkoman Corp ADR is currently generating about -0.12 per unit of risk. If you would invest  99,000  in Emmi AG on December 21, 2024 and sell it today you would lose (9,237) from holding Emmi AG or give up 9.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Emmi AG  vs.  Kikkoman Corp ADR

Emmi AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emmi AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Kikkoman Corp ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kikkoman Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Emmi AG and Kikkoman Corp

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

The idea behind Emmi AG and Kikkoman Corp ADR 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.