Correlation Between Gurit Holding and EMS CHEMIE

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

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

Diversification Opportunities for Gurit Holding and EMS CHEMIE

0.45

Correlation Coefficient

Gurit Holding  EMS CHEMIE

Very weak diversification

The 3 months correlation between Gurit and EMS is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Gurit Holding AG and EMS CHEMIE HOLDING AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMS CHEMIE HOLDING and Gurit Holding 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 Gurit Holding AG are associated (or correlated) with EMS CHEMIE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMS CHEMIE HOLDING has no effect on the direction of Gurit Holding i.e., Gurit Holding and EMS CHEMIE go up and down completely randomly.

Pair Corralation between Gurit Holding and EMS CHEMIE

Assuming the 90 days trading horizon Gurit Holding AG is expected to generate 6.66 times more return on investment than EMS CHEMIE. However, Gurit Holding is 6.66 times more volatile than EMS CHEMIE HOLDING AG. It trades about 0.15 of its potential returns per unit of risk. EMS CHEMIE HOLDING AG is currently generating about 0.08 per unit of risk. If you would invest  1,152  in Gurit Holding AG on November 19, 2024 and sell it today you would earn a total of  672.00  from holding Gurit Holding AG or generate 58.33% return on investment over 90 days.

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

Gurit Holding AG  vs.  EMS CHEMIE HOLDING AG

Gurit Holding AG

Risk-Adjusted Performance

Good

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

EMS CHEMIE HOLDING

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EMS CHEMIE HOLDING AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Gurit Holding and EMS CHEMIE

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

The idea behind Gurit Holding AG and EMS CHEMIE 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.