Correlation Between Leonteq AG and EFG International

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

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

Diversification Opportunities for Leonteq AG and EFG International

-0.47

Correlation Coefficient

Leonteq AG  EFG International

Very good diversification

The 3 months correlation between Leonteq and EFG is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Leonteq AG and EFG International AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFG International and Leonteq AG 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 Leonteq AG are associated (or correlated) with EFG International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFG International has no effect on the direction of Leonteq AG i.e., Leonteq AG and EFG International go up and down completely randomly.

Pair Corralation between Leonteq AG and EFG International

Assuming the 90 days trading horizon Leonteq AG is expected to under-perform the EFG International. In addition to that, Leonteq AG is 1.43 times more volatile than EFG International AG. It trades about -0.12 of its total potential returns per unit of risk. EFG International AG is currently generating about 0.06 per unit of volatility. If you would invest  1,150  in EFG International AG on September 5, 2024 and sell it today you would earn a total of  50.00  from holding EFG International AG or generate 4.35% return on investment over 90 days.

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

Leonteq AG  vs.  EFG International AG

Leonteq AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leonteq 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.

EFG International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EFG International AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, EFG International 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 Leonteq AG and EFG International

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

The idea behind Leonteq AG and EFG International 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.