Correlation Between Stadler Rail and Logitech International

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

By analyzing existing cross correlation between Stadler Rail AG and Logitech International SA, you can compare the effects of market volatilities on Stadler Rail and Logitech International 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 Stadler Rail with a short position of Logitech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stadler Rail and Logitech International.

Diversification Opportunities for Stadler Rail and Logitech International

0.32

Correlation Coefficient

Stadler Rail  Logitech International

Weak diversification

The 3 months correlation between Stadler and Logitech is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Stadler Rail AG and Logitech International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logitech International and Stadler Rail 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 Stadler Rail AG are associated (or correlated) with Logitech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logitech International has no effect on the direction of Stadler Rail i.e., Stadler Rail and Logitech International go up and down completely randomly.

Pair Corralation between Stadler Rail and Logitech International

Assuming the 90 days trading horizon Stadler Rail AG is expected to under-perform the Logitech International. In addition to that, Stadler Rail is 1.73 times more volatile than Logitech International SA. It trades about -0.29 of its total potential returns per unit of risk. Logitech International SA is currently generating about 0.25 per unit of volatility. If you would invest  6,958  in Logitech International SA on September 12, 2024 and sell it today you would earn a total of  566.00  from holding Logitech International SA or generate 8.13% return on investment over 90 days.

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

Stadler Rail AG  vs.  Logitech International SA

Stadler Rail AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stadler Rail 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Logitech International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Logitech International SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Logitech International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Stadler Rail and Logitech International

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

The idea behind Stadler Rail AG and Logitech International SA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.