Correlation Between Geberit AG and BELIMO Holding

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

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

Diversification Opportunities for Geberit AG and BELIMO Holding

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Correlation Coefficient

Geberit AG  BELIMO Holding

Pay attention - limited upside

The 3 months correlation between Geberit and BELIMO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Geberit AG ADR and BELIMO Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BELIMO Holding AG and Geberit 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 Geberit AG ADR are associated (or correlated) with BELIMO Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BELIMO Holding AG has no effect on the direction of Geberit AG i.e., Geberit AG and BELIMO Holding go up and down completely randomly.

Pair Corralation between Geberit AG and BELIMO Holding

Assuming the 90 days horizon Geberit AG ADR is expected to under-perform the BELIMO Holding. But the pink sheet apears to be less risky and, when comparing its historical volatility, Geberit AG ADR is 1.35 times less risky than BELIMO Holding. The pink sheet trades about -0.01 of its potential returns per unit of risk. The BELIMO Holding AG is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  52,063  in BELIMO Holding AG on October 1, 2024 and sell it today you would earn a total of  15,809  from holding BELIMO Holding AG or generate 30.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	87.9%
Values	Daily Returns

Geberit AG ADR  vs.  BELIMO Holding AG

Geberit AG ADR

Risk-Adjusted Performance

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Very Weak

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

BELIMO Holding AG

Risk-Adjusted Performance

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Very Weak

Over the last 90 days BELIMO Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BELIMO Holding is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Geberit AG and BELIMO Holding

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

The idea behind Geberit AG ADR and BELIMO Holding 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..