Correlation Between Emmi AG and Bergbahnen Engelberg

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

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

Diversification Opportunities for Emmi AG and Bergbahnen Engelberg

0.67

Correlation Coefficient

Emmi AG  Bergbahnen Engelberg

Poor diversification

The 3 months correlation between Emmi and Bergbahnen is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Emmi AG and Bergbahnen Engelberg Truebsee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bergbahnen Engelberg 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 Bergbahnen Engelberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bergbahnen Engelberg has no effect on the direction of Emmi AG i.e., Emmi AG and Bergbahnen Engelberg go up and down completely randomly.

Pair Corralation between Emmi AG and Bergbahnen Engelberg

Assuming the 90 days trading horizon Emmi AG is expected to generate 1.02 times less return on investment than Bergbahnen Engelberg. But when comparing it to its historical volatility, Emmi AG is 1.36 times less risky than Bergbahnen Engelberg. It trades about 0.14 of its potential returns per unit of risk. Bergbahnen Engelberg Truebsee is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,807  in Bergbahnen Engelberg Truebsee on December 31, 2024 and sell it today you would earn a total of  363.00  from holding Bergbahnen Engelberg Truebsee or generate 9.54% return on investment over 90 days.

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

Emmi AG  vs.  Bergbahnen Engelberg Truebsee

Emmi AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emmi AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Emmi AG may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Bergbahnen Engelberg

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bergbahnen Engelberg Truebsee are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bergbahnen Engelberg may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Emmi AG and Bergbahnen Engelberg

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

The idea behind Emmi AG and Bergbahnen Engelberg Truebsee 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..