Correlation Between Polytec Holding and Zumtobel Group

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

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

Diversification Opportunities for Polytec Holding and Zumtobel Group

0.89

Correlation Coefficient

Polytec Holding  Zumtobel Group

Very poor diversification

The 3 months correlation between Polytec and Zumtobel is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Polytec Holding AG and Zumtobel Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumtobel Group AG and Polytec 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 Polytec Holding AG are associated (or correlated) with Zumtobel Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zumtobel Group AG has no effect on the direction of Polytec Holding i.e., Polytec Holding and Zumtobel Group go up and down completely randomly.

Pair Corralation between Polytec Holding and Zumtobel Group

Assuming the 90 days trading horizon Polytec Holding AG is expected to under-perform the Zumtobel Group. In addition to that, Polytec Holding is 1.68 times more volatile than Zumtobel Group AG. It trades about -0.15 of its total potential returns per unit of risk. Zumtobel Group AG is currently generating about -0.09 per unit of volatility. If you would invest  548.00  in Zumtobel Group AG on October 7, 2024 and sell it today you would lose (48.00) from holding Zumtobel Group AG or give up 8.76% of portfolio value over 90 days.

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

Polytec Holding AG  vs.  Zumtobel Group AG

Polytec Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polytec Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Zumtobel Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zumtobel Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Polytec Holding and Zumtobel Group

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

The idea behind Polytec Holding AG and Zumtobel Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.