Correlation Between Helvetia Holding and Meier Tobler

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

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

Diversification Opportunities for Helvetia Holding and Meier Tobler

0.59

Correlation Coefficient

Helvetia Holding  Meier Tobler

Very weak diversification

The 3 months correlation between Helvetia and Meier is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Helvetia Holding AG and Meier Tobler Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meier Tobler Group and Helvetia 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 Helvetia Holding AG are associated (or correlated) with Meier Tobler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meier Tobler Group has no effect on the direction of Helvetia Holding i.e., Helvetia Holding and Meier Tobler go up and down completely randomly.

Pair Corralation between Helvetia Holding and Meier Tobler

Assuming the 90 days trading horizon Helvetia Holding AG is expected to generate 0.5 times more return on investment than Meier Tobler. However, Helvetia Holding AG is 2.01 times less risky than Meier Tobler. It trades about 0.05 of its potential returns per unit of risk. Meier Tobler Group is currently generating about -0.04 per unit of risk. If you would invest  12,555  in Helvetia Holding AG on September 17, 2024 and sell it today you would earn a total of  2,085  from holding Helvetia Holding AG or generate 16.61% return on investment over 90 days.

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

Helvetia Holding AG  vs.  Meier Tobler Group

Helvetia Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Helvetia Holding AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Helvetia Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Meier Tobler Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Meier Tobler Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Meier Tobler showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Helvetia Holding and Meier Tobler

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

The idea behind Helvetia Holding AG and Meier Tobler Group 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.