Correlation Between EMS CHEMIE and Stadler Rail

Can any of the company-specific risk be diversified away by investing in both EMS CHEMIE and Stadler Rail 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 Stadler Rail 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 Stadler Rail AG, you can compare the effects of market volatilities on EMS CHEMIE and Stadler Rail 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 Stadler Rail. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMS CHEMIE and Stadler Rail.

Diversification Opportunities for EMS CHEMIE and Stadler Rail

0.95

Correlation Coefficient

EMS CHEMIE  Stadler Rail

Almost no diversification

The 3 months correlation between EMS and Stadler is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding EMS CHEMIE HOLDING AG and Stadler Rail AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stadler Rail AG 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 Stadler Rail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stadler Rail AG has no effect on the direction of EMS CHEMIE i.e., EMS CHEMIE and Stadler Rail go up and down completely randomly.

Pair Corralation between EMS CHEMIE and Stadler Rail

Assuming the 90 days trading horizon EMS CHEMIE HOLDING AG is expected to generate 0.53 times more return on investment than Stadler Rail. However, EMS CHEMIE HOLDING AG is 1.9 times less risky than Stadler Rail. It trades about -0.14 of its potential returns per unit of risk. Stadler Rail AG is currently generating about -0.17 per unit of risk. If you would invest  68,550  in EMS CHEMIE HOLDING AG on September 15, 2024 and sell it today you would lose (6,350) from holding EMS CHEMIE HOLDING AG or give up 9.26% of portfolio value over 90 days.

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

EMS CHEMIE HOLDING AG  vs.  Stadler Rail 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.

Stadler Rail AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stadler Rail 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with EMS CHEMIE and Stadler Rail

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

The idea behind EMS CHEMIE HOLDING AG and Stadler Rail 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.