Correlation Between Komax Holding and Leclanche

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

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

Diversification Opportunities for Komax Holding and Leclanche

-0.07

Correlation Coefficient

Komax Holding  Leclanche

Good diversification

The 3 months correlation between Komax and Leclanche is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Komax Holding AG and Leclanche SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leclanche SA and Komax 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 Komax Holding AG are associated (or correlated) with Leclanche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leclanche SA has no effect on the direction of Komax Holding i.e., Komax Holding and Leclanche go up and down completely randomly.

Pair Corralation between Komax Holding and Leclanche

Assuming the 90 days trading horizon Komax Holding AG is expected to under-perform the Leclanche. But the stock apears to be less risky and, when comparing its historical volatility, Komax Holding AG is 9.3 times less risky than Leclanche. The stock trades about -0.02 of its potential returns per unit of risk. The Leclanche SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Leclanche SA on September 16, 2024 and sell it today you would earn a total of  2.00  from holding Leclanche SA or generate 11.11% return on investment over 90 days.

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

Komax Holding AG  vs.  Leclanche SA

Komax Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Leclanche SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Leclanche SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Leclanche showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Komax Holding and Leclanche

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

The idea behind Komax Holding AG and Leclanche SA 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.