Correlation Between Implenia and Rieter Holding

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

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

Diversification Opportunities for Implenia and Rieter Holding

0.03

Correlation Coefficient

Implenia  Rieter Holding

Significant diversification

The 3 months correlation between Implenia and Rieter is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Implenia AG and Rieter Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rieter Holding 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 Rieter Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rieter Holding AG has no effect on the direction of Implenia i.e., Implenia and Rieter Holding go up and down completely randomly.

Pair Corralation between Implenia and Rieter Holding

Assuming the 90 days trading horizon Implenia AG is expected to generate 1.28 times more return on investment than Rieter Holding. However, Implenia is 1.28 times more volatile than Rieter Holding AG. It trades about 0.09 of its potential returns per unit of risk. Rieter Holding AG is currently generating about -0.11 per unit of risk. If you would invest  3,425  in Implenia AG on December 5, 2024 and sell it today you would earn a total of  105.00  from holding Implenia AG or generate 3.07% return on investment over 90 days.

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

Implenia AG  vs.  Rieter Holding AG

Implenia AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Implenia AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Implenia showed solid returns over the last few months and may actually be approaching a breakup point.

Rieter Holding AG

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Implenia AG and Rieter 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.