Correlation Between Implenia and Comet Holding

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

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

Diversification Opportunities for Implenia and Comet Holding

0.58

Correlation Coefficient

Implenia  Comet Holding

Very weak diversification

The 3 months correlation between Implenia and Comet is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Implenia AG and Comet Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comet Holding AG and Implenia 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 Implenia AG are associated (or correlated) with Comet Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comet Holding AG has no effect on the direction of Implenia i.e., Implenia and Comet Holding go up and down completely randomly.

Pair Corralation between Implenia and Comet Holding

Assuming the 90 days trading horizon Implenia AG is expected to generate 0.7 times more return on investment than Comet Holding. However, Implenia AG is 1.42 times less risky than Comet Holding. It trades about -0.03 of its potential returns per unit of risk. Comet Holding AG is currently generating about -0.13 per unit of risk. If you would invest  3,150  in Implenia AG on September 17, 2024 and sell it today you would lose (100.00) from holding Implenia AG or give up 3.17% of portfolio value over 90 days.

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

Implenia AG  vs.  Comet Holding AG

Implenia AG

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Implenia AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Implenia is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Comet Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comet 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.

Pair Trading with Implenia and Comet Holding

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

The idea behind Implenia AG and Comet 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.