Correlation Between Bachem Holding and Belimo Holding

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

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

Diversification Opportunities for Bachem Holding and Belimo Holding

-0.2

Correlation Coefficient

Bachem Holding  Belimo Holding

Good diversification

The 3 months correlation between Bachem and Belimo is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bachem Holding AG and Belimo Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belimo Holding and Bachem Holding 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 Bachem Holding AG are associated (or correlated) with Belimo Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belimo Holding has no effect on the direction of Bachem Holding i.e., Bachem Holding and Belimo Holding go up and down completely randomly.

Pair Corralation between Bachem Holding and Belimo Holding

Assuming the 90 days trading horizon Bachem Holding AG is expected to under-perform the Belimo Holding. In addition to that, Bachem Holding is 2.04 times more volatile than Belimo Holding. It trades about -0.26 of its total potential returns per unit of risk. Belimo Holding is currently generating about 0.32 per unit of volatility. If you would invest  56,950  in Belimo Holding on September 13, 2024 and sell it today you would earn a total of  4,150  from holding Belimo Holding or generate 7.29% return on investment over 90 days.

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

Bachem Holding AG  vs.  Belimo Holding

Bachem Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bachem Holding 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.

Belimo Holding

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Belimo Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Belimo 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 Bachem Holding and Belimo Holding

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

The idea behind Bachem Holding AG and Belimo 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.