Correlation Between Implenia and MCH Group

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

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

Diversification Opportunities for Implenia and MCH Group

-0.22

Correlation Coefficient

Implenia  MCH Group

Very good diversification

The 3 months correlation between Implenia and MCH is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Implenia AG and MCH Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCH Group AG and Implenia 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 Implenia AG are associated (or correlated) with MCH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCH Group AG has no effect on the direction of Implenia i.e., Implenia and MCH Group go up and down completely randomly.

Pair Corralation between Implenia and MCH Group

Assuming the 90 days trading horizon Implenia AG is expected to under-perform the MCH Group. But the stock apears to be less risky and, when comparing its historical volatility, Implenia AG is 1.11 times less risky than MCH Group. The stock trades about -0.06 of its potential returns per unit of risk. The MCH Group AG is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  395.00  in MCH Group AG on September 16, 2024 and sell it today you would earn a total of  4.00  from holding MCH Group AG or generate 1.01% return on investment over 90 days.

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

Implenia AG  vs.  MCH Group AG

Implenia AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Implenia AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Implenia is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

MCH Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCH Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, MCH Group 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 Implenia and MCH Group

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

The idea behind Implenia AG and MCH Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.