Correlation Between Sulzer AG and Mikron Holding

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

Diversification Opportunities for Sulzer AG and Mikron Holding

0.0

Correlation Coefficient

Sulzer AG  Mikron Holding

Pay attention - limited upside

The 3 months correlation between Sulzer and Mikron is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sulzer AG and Mikron Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mikron 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 Mikron Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mikron Holding AG has no effect on the direction of Sulzer AG i.e., Sulzer AG and Mikron Holding go up and down completely randomly.

Pair Corralation between Sulzer AG and Mikron Holding

If you would invest  13,100  in Sulzer AG on December 28, 2024 and sell it today you would earn a total of  3,060  from holding Sulzer AG or generate 23.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sulzer AG  vs.  Mikron Holding AG

Sulzer AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sulzer AG are ranked lower than 13 (%) 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.

Mikron Holding AG

Risk-Adjusted Performance

Good

Over the last 90 days Mikron Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mikron Holding is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sulzer AG and Mikron Holding

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

The idea behind Sulzer AG and Mikron 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.