Correlation Between Maschinenfabrik Berthold and ACCO Brands

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

By analyzing existing cross correlation between Maschinenfabrik Berthold Hermle and ACCO Brands, you can compare the effects of market volatilities on Maschinenfabrik Berthold and ACCO Brands 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 Maschinenfabrik Berthold with a short position of ACCO Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maschinenfabrik Berthold and ACCO Brands.

Diversification Opportunities for Maschinenfabrik Berthold and ACCO Brands

-0.85

Correlation Coefficient

Maschinenfabrik Berthold  ACCO Brands

Pay attention - limited upside

The 3 months correlation between Maschinenfabrik and ACCO is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Maschinenfabrik Berthold Herml and ACCO Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACCO Brands and Maschinenfabrik Berthold 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 Maschinenfabrik Berthold Hermle are associated (or correlated) with ACCO Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACCO Brands has no effect on the direction of Maschinenfabrik Berthold i.e., Maschinenfabrik Berthold and ACCO Brands go up and down completely randomly.

Pair Corralation between Maschinenfabrik Berthold and ACCO Brands

Assuming the 90 days trading horizon Maschinenfabrik Berthold Hermle is expected to under-perform the ACCO Brands. But the stock apears to be less risky and, when comparing its historical volatility, Maschinenfabrik Berthold Hermle is 1.37 times less risky than ACCO Brands. The stock trades about -0.17 of its potential returns per unit of risk. The ACCO Brands is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  458.00  in ACCO Brands on September 13, 2024 and sell it today you would earn a total of  122.00  from holding ACCO Brands or generate 26.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Maschinenfabrik Berthold Herml  vs.  ACCO Brands

Maschinenfabrik Berthold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maschinenfabrik Berthold Hermle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ACCO Brands

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ACCO Brands are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ACCO Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maschinenfabrik Berthold and ACCO Brands

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

The idea behind Maschinenfabrik Berthold Hermle and ACCO Brands 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.