Correlation Between Schindler and Belimo Holding

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

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

Diversification Opportunities for Schindler and Belimo Holding

-0.09

Correlation Coefficient

Schindler  Belimo Holding

Good diversification

The 3 months correlation between Schindler and Belimo is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Schindler Ps and Belimo Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belimo Holding and Schindler 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 Schindler Ps are associated (or correlated) with Belimo Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belimo Holding has no effect on the direction of Schindler i.e., Schindler and Belimo Holding go up and down completely randomly.

Pair Corralation between Schindler and Belimo Holding

Assuming the 90 days trading horizon Schindler is expected to generate 5.44 times less return on investment than Belimo Holding. But when comparing it to its historical volatility, Schindler Ps is 1.63 times less risky than Belimo Holding. It trades about 0.19 of its potential returns per unit of risk. Belimo Holding is currently generating about 0.64 of returns per unit of risk over similar time horizon. If you would invest  60,200  in Belimo Holding on October 26, 2024 and sell it today you would earn a total of  10,350  from holding Belimo Holding or generate 17.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Schindler Ps  vs.  Belimo Holding

Schindler Ps

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Schindler Ps are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Schindler is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Belimo Holding

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Belimo Holding are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Belimo Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schindler and Belimo Holding

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

The idea behind Schindler Ps and Belimo 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.