Correlation Between Schindler and Sulzer AG
Can any of the company-specific risk be diversified away by investing in both Schindler and Sulzer AG 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 Sulzer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schindler Ps and Sulzer AG, you can compare the effects of market volatilities on Schindler and Sulzer AG 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 Sulzer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schindler and Sulzer AG.
Diversification Opportunities for Schindler and Sulzer AG
Significant diversification
The 3 months correlation between Schindler and Sulzer is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Schindler Ps and Sulzer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sulzer AG 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 Sulzer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sulzer AG has no effect on the direction of Schindler i.e., Schindler and Sulzer AG go up and down completely randomly.
Pair Corralation between Schindler and Sulzer AG
Assuming the 90 days trading horizon Schindler Ps is expected to generate 0.59 times more return on investment than Sulzer AG. However, Schindler Ps is 1.7 times less risky than Sulzer AG. It trades about 0.1 of its potential returns per unit of risk. Sulzer AG is currently generating about 0.05 per unit of risk. If you would invest 24,160 in Schindler Ps on September 15, 2024 and sell it today you would earn a total of 1,680 from holding Schindler Ps or generate 6.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Schindler Ps vs. Sulzer AG
Performance |
Timeline |
Schindler Ps |
Sulzer AG |
Schindler and Sulzer AG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Schindler and Sulzer AG
The main advantage of trading using opposite Schindler and Sulzer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schindler position performs unexpectedly, Sulzer AG 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 Sulzer AG will offset losses from the drop in Sulzer AG's long position.Schindler vs. Sulzer AG | Schindler vs. Helvetia Holding AG | Schindler vs. Swiss Life Holding | Schindler vs. Adecco Group AG |
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Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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