Correlation Between Sulzer AG and Aryzta AG

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

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

Diversification Opportunities for Sulzer AG and Aryzta AG

0.81

Correlation Coefficient

Sulzer AG  Aryzta AG

Very poor diversification

The 3 months correlation between Sulzer and Aryzta is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sulzer AG and Aryzta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aryzta AG and Sulzer AG 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 Sulzer AG are associated (or correlated) with Aryzta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aryzta AG has no effect on the direction of Sulzer AG i.e., Sulzer AG and Aryzta AG go up and down completely randomly.

Pair Corralation between Sulzer AG and Aryzta AG

Assuming the 90 days trading horizon Sulzer AG is expected to generate 1.26 times less return on investment than Aryzta AG. In addition to that, Sulzer AG is 1.35 times more volatile than Aryzta AG. It trades about 0.13 of its total potential returns per unit of risk. Aryzta AG is currently generating about 0.22 per unit of volatility. If you would invest  159.00  in Aryzta AG on December 30, 2024 and sell it today you would earn a total of  39.00  from holding Aryzta AG or generate 24.53% return on investment over 90 days.

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

Sulzer AG  vs.  Aryzta AG

Sulzer AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sulzer AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sulzer AG showed solid returns over the last few months and may actually be approaching a breakup point.

Aryzta AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aryzta AG are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Aryzta AG showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sulzer AG and Aryzta AG

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

The idea behind Sulzer AG and Aryzta 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.