Correlation Between EMS CHEMIE and Bergbahnen Engelberg

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

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

Diversification Opportunities for EMS CHEMIE and Bergbahnen Engelberg

0.46

Correlation Coefficient

EMS CHEMIE  Bergbahnen Engelberg

Very weak diversification

The 3 months correlation between EMS and Bergbahnen is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding EMS CHEMIE HOLDING 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 EMS CHEMIE 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 EMS CHEMIE HOLDING 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 EMS CHEMIE i.e., EMS CHEMIE and Bergbahnen Engelberg go up and down completely randomly.

Pair Corralation between EMS CHEMIE and Bergbahnen Engelberg

Assuming the 90 days trading horizon EMS CHEMIE HOLDING AG is expected to under-perform the Bergbahnen Engelberg. But the stock apears to be less risky and, when comparing its historical volatility, EMS CHEMIE HOLDING AG is 1.18 times less risky than Bergbahnen Engelberg. The stock trades about -0.01 of its potential returns per unit of risk. The Bergbahnen Engelberg Truebsee is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,690  in Bergbahnen Engelberg Truebsee on December 30, 2024 and sell it today you would earn a total of  480.00  from holding Bergbahnen Engelberg Truebsee or generate 13.01% return on investment over 90 days.

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

EMS CHEMIE HOLDING AG  vs.  Bergbahnen Engelberg Truebsee

EMS CHEMIE HOLDING

Risk-Adjusted Performance

Very Weak

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

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 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bergbahnen Engelberg showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EMS CHEMIE and Bergbahnen Engelberg

The main advantage of trading using opposite EMS CHEMIE and Bergbahnen Engelberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMS CHEMIE 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 EMS CHEMIE HOLDING 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.