Correlation Between Sulzer AG and Komax Holding

Can any of the company-specific risk be diversified away by investing in both Sulzer AG and Komax 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 Komax 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 Komax Holding AG, you can compare the effects of market volatilities on Sulzer AG and Komax 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 Komax Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sulzer AG and Komax Holding.

Diversification Opportunities for Sulzer AG and Komax Holding

0.14

Correlation Coefficient

Sulzer AG  Komax Holding

Average diversification

The 3 months correlation between Sulzer and Komax is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sulzer AG and Komax Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komax Holding 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 Komax Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komax Holding AG has no effect on the direction of Sulzer AG i.e., Sulzer AG and Komax Holding go up and down completely randomly.

Pair Corralation between Sulzer AG and Komax Holding

Assuming the 90 days trading horizon Sulzer AG is expected to generate 0.93 times more return on investment than Komax Holding. However, Sulzer AG is 1.08 times less risky than Komax Holding. It trades about 0.05 of its potential returns per unit of risk. Komax Holding AG is currently generating about -0.02 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sulzer AG  vs.  Komax Holding AG

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.

Komax Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Komax Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Komax Holding 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 Sulzer AG and Komax Holding

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

The idea behind Sulzer AG and Komax Holding 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.