Correlation Between Lem Holding and Implenia

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

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

Diversification Opportunities for Lem Holding and Implenia

0.75

Correlation Coefficient

Lem Holding  Implenia

Poor diversification

The 3 months correlation between Lem and Implenia is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lem Holding SA and Implenia AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Implenia AG and Lem 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 Lem Holding SA are associated (or correlated) with Implenia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Implenia AG has no effect on the direction of Lem Holding i.e., Lem Holding and Implenia go up and down completely randomly.

Pair Corralation between Lem Holding and Implenia

Assuming the 90 days trading horizon Lem Holding SA is expected to under-perform the Implenia. In addition to that, Lem Holding is 1.64 times more volatile than Implenia AG. It trades about -0.13 of its total potential returns per unit of risk. Implenia AG is currently generating about 0.09 per unit of volatility. If you would invest  3,015  in Implenia AG on October 3, 2024 and sell it today you would earn a total of  55.00  from holding Implenia AG or generate 1.82% return on investment over 90 days.

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

Lem Holding SA  vs.  Implenia AG

Lem Holding SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lem Holding SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Implenia AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Implenia AG has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Lem Holding and Implenia

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

The idea behind Lem Holding SA and Implenia 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.