Correlation Between Mikron Holding and Carlo Gavazzi

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

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

Diversification Opportunities for Mikron Holding and Carlo Gavazzi

0.91

Correlation Coefficient

Mikron Holding  Carlo Gavazzi

Almost no diversification

The 3 months correlation between Mikron and Carlo is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Mikron Holding AG and Carlo Gavazzi Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlo Gavazzi Holding and Mikron 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 Mikron Holding AG are associated (or correlated) with Carlo Gavazzi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlo Gavazzi Holding has no effect on the direction of Mikron Holding i.e., Mikron Holding and Carlo Gavazzi go up and down completely randomly.

Pair Corralation between Mikron Holding and Carlo Gavazzi

Assuming the 90 days trading horizon Mikron Holding AG is expected to under-perform the Carlo Gavazzi. But the stock apears to be less risky and, when comparing its historical volatility, Mikron Holding AG is 1.38 times less risky than Carlo Gavazzi. The stock trades about -0.2 of its potential returns per unit of risk. The Carlo Gavazzi Holding is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  23,300  in Carlo Gavazzi Holding on September 15, 2024 and sell it today you would lose (3,750) from holding Carlo Gavazzi Holding or give up 16.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.97%
Values	Daily Returns

Mikron Holding AG  vs.  Carlo Gavazzi Holding

Mikron Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mikron Holding 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 fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Carlo Gavazzi Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlo Gavazzi Holding 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Mikron Holding and Carlo Gavazzi

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

The idea behind Mikron Holding AG and Carlo Gavazzi Holding 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.