Correlation Between Logitech International and Geberit AG

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

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

Diversification Opportunities for Logitech International and Geberit AG

0.45

Correlation Coefficient

Logitech International  Geberit AG

Very weak diversification

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

Pair Corralation between Logitech International and Geberit AG

Assuming the 90 days trading horizon Logitech International SA is expected to under-perform the Geberit AG. In addition to that, Logitech International is 1.71 times more volatile than Geberit AG. It trades about -0.08 of its total potential returns per unit of risk. Geberit AG is currently generating about -0.09 per unit of volatility. If you would invest  55,140  in Geberit AG on August 30, 2024 and sell it today you would lose (2,760) from holding Geberit AG or give up 5.01% of portfolio value over 90 days.

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

Logitech International SA  vs.  Geberit AG

Logitech International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Logitech International SA 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.

Geberit AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Geberit AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Geberit AG 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 Logitech International and Geberit AG

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

The idea behind Logitech International SA and Geberit 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.