Correlation Between Emmi AG and Burckhardt Compression

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

By analyzing existing cross correlation between Emmi AG and Burckhardt Compression, you can compare the effects of market volatilities on Emmi AG and Burckhardt Compression 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 Burckhardt Compression. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emmi AG and Burckhardt Compression.

Diversification Opportunities for Emmi AG and Burckhardt Compression

-0.76

Correlation Coefficient

Emmi AG  Burckhardt Compression

Pay attention - limited upside

The 3 months correlation between Emmi and Burckhardt is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Emmi AG and Burckhardt Compression in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burckhardt Compression 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 Burckhardt Compression. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burckhardt Compression has no effect on the direction of Emmi AG i.e., Emmi AG and Burckhardt Compression go up and down completely randomly.

Pair Corralation between Emmi AG and Burckhardt Compression

Assuming the 90 days trading horizon Emmi AG is expected to under-perform the Burckhardt Compression. But the stock apears to be less risky and, when comparing its historical volatility, Emmi AG is 1.54 times less risky than Burckhardt Compression. The stock trades about -0.2 of its potential returns per unit of risk. The Burckhardt Compression is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  57,000  in Burckhardt Compression on September 5, 2024 and sell it today you would earn a total of  8,200  from holding Burckhardt Compression or generate 14.39% return on investment over 90 days.

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

Emmi AG  vs.  Burckhardt Compression

Emmi AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emmi AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal 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.

Burckhardt Compression

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Burckhardt Compression are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Burckhardt Compression showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Emmi AG and Burckhardt Compression

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

The idea behind Emmi AG and Burckhardt Compression 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.