Correlation Between Bergbahnen Engelberg and EMS CHEMIE

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

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

Diversification Opportunities for Bergbahnen Engelberg and EMS CHEMIE

0.65

Correlation Coefficient

Bergbahnen Engelberg  EMS CHEMIE

Poor diversification

The 3 months correlation between Bergbahnen and EMS is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bergbahnen Engelberg Truebsee and EMS CHEMIE HOLDING AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMS CHEMIE HOLDING and Bergbahnen Engelberg 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 Bergbahnen Engelberg Truebsee are associated (or correlated) with EMS CHEMIE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMS CHEMIE HOLDING has no effect on the direction of Bergbahnen Engelberg i.e., Bergbahnen Engelberg and EMS CHEMIE go up and down completely randomly.

Pair Corralation between Bergbahnen Engelberg and EMS CHEMIE

Assuming the 90 days trading horizon Bergbahnen Engelberg Truebsee is expected to generate 1.56 times more return on investment than EMS CHEMIE. However, Bergbahnen Engelberg is 1.56 times more volatile than EMS CHEMIE HOLDING AG. It trades about 0.16 of its potential returns per unit of risk. EMS CHEMIE HOLDING AG is currently generating about 0.01 per unit of risk. If you would invest  3,709  in Bergbahnen Engelberg Truebsee on December 2, 2024 and sell it today you would earn a total of  541.00  from holding Bergbahnen Engelberg Truebsee or generate 14.59% return on investment over 90 days.

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

Bergbahnen Engelberg Truebsee  vs.  EMS CHEMIE HOLDING AG

Bergbahnen Engelberg

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bergbahnen Engelberg Truebsee are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bergbahnen Engelberg showed solid returns over the last few months and may actually be approaching a breakup point.

EMS CHEMIE HOLDING

Risk-Adjusted Performance

Very Weak

Over the last 90 days EMS CHEMIE HOLDING AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, EMS CHEMIE 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 Bergbahnen Engelberg and EMS CHEMIE

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

The idea behind Bergbahnen Engelberg Truebsee and EMS CHEMIE 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.