Correlation Between Sulzer AG and Inficon Holding

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

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

Diversification Opportunities for Sulzer AG and Inficon Holding

0.48

Correlation Coefficient

Sulzer AG  Inficon Holding

Very weak diversification

The 3 months correlation between Sulzer and Inficon is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sulzer AG and Inficon Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inficon Holding 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 Inficon Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inficon Holding has no effect on the direction of Sulzer AG i.e., Sulzer AG and Inficon Holding go up and down completely randomly.

Pair Corralation between Sulzer AG and Inficon Holding

Assuming the 90 days trading horizon Sulzer AG is expected to generate 1.13 times more return on investment than Inficon Holding. However, Sulzer AG is 1.13 times more volatile than Inficon Holding. It trades about 0.05 of its potential returns per unit of risk. Inficon Holding is currently generating about -0.11 per unit of risk. If you would invest  12,760  in Sulzer AG on September 15, 2024 and sell it today you would earn a total of  600.00  from holding Sulzer AG or generate 4.7% return on investment over 90 days.

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

Sulzer AG  vs.  Inficon Holding

Sulzer AG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sulzer AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sulzer AG is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Inficon Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sulzer AG and Inficon Holding

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

The idea behind Sulzer AG and Inficon 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.