Correlation Between Tecan Group and Sensirion Holding

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

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

Diversification Opportunities for Tecan Group and Sensirion Holding

0.28

Correlation Coefficient

Tecan Group  Sensirion Holding

Modest diversification

The 3 months correlation between Tecan and Sensirion is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Tecan Group AG and Sensirion Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensirion Holding and Tecan Group 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 Tecan Group AG are associated (or correlated) with Sensirion Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensirion Holding has no effect on the direction of Tecan Group i.e., Tecan Group and Sensirion Holding go up and down completely randomly.

Pair Corralation between Tecan Group and Sensirion Holding

Assuming the 90 days trading horizon Tecan Group AG is expected to under-perform the Sensirion Holding. But the stock apears to be less risky and, when comparing its historical volatility, Tecan Group AG is 1.56 times less risky than Sensirion Holding. The stock trades about -0.1 of its potential returns per unit of risk. The Sensirion Holding AG is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,650  in Sensirion Holding AG on December 5, 2024 and sell it today you would earn a total of  80.00  from holding Sensirion Holding AG or generate 1.42% return on investment over 90 days.

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

Tecan Group AG  vs.  Sensirion Holding AG

Tecan Group AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tecan Group AG 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.

Sensirion Holding

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sensirion Holding AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sensirion 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 Tecan Group and Sensirion Holding

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

The idea behind Tecan Group AG and Sensirion 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.