Correlation Between EMS CHEMIE and Bucher Industries

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

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

Diversification Opportunities for EMS CHEMIE and Bucher Industries

0.67

Correlation Coefficient

EMS CHEMIE  Bucher Industries

Poor diversification

The 3 months correlation between EMS and Bucher is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding EMS CHEMIE HOLDING AG and Bucher Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bucher Industries and EMS CHEMIE 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 EMS CHEMIE HOLDING AG are associated (or correlated) with Bucher Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bucher Industries has no effect on the direction of EMS CHEMIE i.e., EMS CHEMIE and Bucher Industries go up and down completely randomly.

Pair Corralation between EMS CHEMIE and Bucher Industries

Assuming the 90 days trading horizon EMS CHEMIE HOLDING AG is expected to under-perform the Bucher Industries. But the stock apears to be less risky and, when comparing its historical volatility, EMS CHEMIE HOLDING AG is 1.09 times less risky than Bucher Industries. The stock trades about -0.17 of its potential returns per unit of risk. The Bucher Industries AG is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  35,650  in Bucher Industries AG on August 30, 2024 and sell it today you would lose (1,950) from holding Bucher Industries AG or give up 5.47% of portfolio value over 90 days.

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

EMS CHEMIE HOLDING AG  vs.  Bucher Industries AG

EMS CHEMIE HOLDING

Risk-Adjusted Performance

0 of 100

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 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.

Bucher Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind EMS CHEMIE HOLDING AG and Bucher Industries 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..