Correlation Between Calida Holding and Emmi AG

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

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

Diversification Opportunities for Calida Holding and Emmi AG

0.9

Correlation Coefficient

Calida Holding  Emmi AG

Almost no diversification

The 3 months correlation between Calida and Emmi is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Calida Holding AG and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG and Calida 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 Calida Holding AG are associated (or correlated) with Emmi AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emmi AG has no effect on the direction of Calida Holding i.e., Calida Holding and Emmi AG go up and down completely randomly.

Pair Corralation between Calida Holding and Emmi AG

Assuming the 90 days trading horizon Calida Holding AG is expected to under-perform the Emmi AG. In addition to that, Calida Holding is 3.04 times more volatile than Emmi AG. It trades about -0.08 of its total potential returns per unit of risk. Emmi AG is currently generating about -0.22 per unit of volatility. If you would invest  86,100  in Emmi AG on September 17, 2024 and sell it today you would lose (11,600) from holding Emmi AG or give up 13.47% of portfolio value over 90 days.

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

Calida Holding AG  vs.  Emmi AG

Calida Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calida Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Emmi AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emmi AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Calida Holding and Emmi AG

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

The idea behind Calida Holding AG and Emmi 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.