Correlation Between SCHMID Group and Loar Holdings

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

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

Diversification Opportunities for SCHMID Group and Loar Holdings

-0.17

Correlation Coefficient

SCHMID Group  Loar Holdings

Good diversification

The 3 months correlation between SCHMID and Loar is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SCHMID Group NV and Loar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loar Holdings and SCHMID Group 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 SCHMID Group NV are associated (or correlated) with Loar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loar Holdings has no effect on the direction of SCHMID Group i.e., SCHMID Group and Loar Holdings go up and down completely randomly.

Pair Corralation between SCHMID Group and Loar Holdings

Assuming the 90 days horizon SCHMID Group NV is expected to under-perform the Loar Holdings. In addition to that, SCHMID Group is 3.73 times more volatile than Loar Holdings. It trades about -0.11 of its total potential returns per unit of risk. Loar Holdings is currently generating about -0.25 per unit of volatility. If you would invest  7,889  in Loar Holdings on December 4, 2024 and sell it today you would lose (1,049) from holding Loar Holdings or give up 13.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

SCHMID Group NV  vs.  Loar Holdings

SCHMID Group NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days SCHMID Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Loar Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with SCHMID Group and Loar Holdings

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

The idea behind SCHMID Group NV and Loar Holdings 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.