Correlation Between HOYA and Straumann Holding

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

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

Diversification Opportunities for HOYA and Straumann Holding

0.45

Correlation Coefficient

HOYA  Straumann Holding

Very weak diversification

The 3 months correlation between HOYA and Straumann is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding HOYA Corp. and Straumann Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Straumann Holding and HOYA 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 HOYA Corporation are associated (or correlated) with Straumann Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Straumann Holding has no effect on the direction of HOYA i.e., HOYA and Straumann Holding go up and down completely randomly.

Pair Corralation between HOYA and Straumann Holding

Assuming the 90 days horizon HOYA Corporation is expected to generate 0.87 times more return on investment than Straumann Holding. However, HOYA Corporation is 1.15 times less risky than Straumann Holding. It trades about -0.01 of its potential returns per unit of risk. Straumann Holding AG is currently generating about -0.04 per unit of risk. If you would invest  14,300  in HOYA Corporation on September 3, 2024 and sell it today you would lose (914.00) from holding HOYA Corporation or give up 6.39% of portfolio value over 90 days.

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

HOYA Corp.  vs.  Straumann Holding AG

HOYA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HOYA Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HOYA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Straumann Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Straumann Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with HOYA and Straumann Holding

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

The idea behind HOYA Corporation and Straumann Holding 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.