Correlation Between Logitech International and Stadler Rail

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

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

Diversification Opportunities for Logitech International and Stadler Rail

0.32

Correlation Coefficient

Logitech International  Stadler Rail

Weak diversification

The 3 months correlation between Logitech and Stadler is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Logitech International SA and Stadler Rail AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stadler Rail AG and Logitech International 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 Logitech International SA are associated (or correlated) with Stadler Rail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stadler Rail AG has no effect on the direction of Logitech International i.e., Logitech International and Stadler Rail go up and down completely randomly.

Pair Corralation between Logitech International and Stadler Rail

Assuming the 90 days trading horizon Logitech International SA is expected to generate 0.92 times more return on investment than Stadler Rail. However, Logitech International SA is 1.09 times less risky than Stadler Rail. It trades about 0.05 of its potential returns per unit of risk. Stadler Rail AG is currently generating about -0.17 per unit of risk. If you would invest  7,061  in Logitech International SA on September 12, 2024 and sell it today you would earn a total of  377.00  from holding Logitech International SA or generate 5.34% return on investment over 90 days.

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

Logitech International SA  vs.  Stadler Rail AG

Logitech International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Logitech International SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Logitech International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Stadler Rail AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stadler Rail AG 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Logitech International and Stadler Rail

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

The idea behind Logitech International SA and Stadler Rail 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.