Correlation Between Emmi AG and Luzerner Kantonalbank

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

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

Diversification Opportunities for Emmi AG and Luzerner Kantonalbank

0.05

Correlation Coefficient

Emmi AG  Luzerner Kantonalbank

Significant diversification

The 3 months correlation between Emmi and Luzerner is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Emmi AG and Luzerner Kantonalbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luzerner Kantonalbank 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 Luzerner Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luzerner Kantonalbank has no effect on the direction of Emmi AG i.e., Emmi AG and Luzerner Kantonalbank go up and down completely randomly.

Pair Corralation between Emmi AG and Luzerner Kantonalbank

Assuming the 90 days trading horizon Emmi AG is expected to under-perform the Luzerner Kantonalbank. In addition to that, Emmi AG is 1.4 times more volatile than Luzerner Kantonalbank AG. It trades about -0.23 of its total potential returns per unit of risk. Luzerner Kantonalbank AG is currently generating about 0.06 per unit of volatility. If you would invest  6,200  in Luzerner Kantonalbank AG on September 18, 2024 and sell it today you would earn a total of  170.00  from holding Luzerner Kantonalbank AG or generate 2.74% return on investment over 90 days.

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

Emmi AG  vs.  Luzerner Kantonalbank AG

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Luzerner Kantonalbank

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Luzerner Kantonalbank AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Luzerner Kantonalbank 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 Emmi AG and Luzerner Kantonalbank

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

The idea behind Emmi AG and Luzerner Kantonalbank 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.