Correlation Between Metall Zug and Logitech International

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

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

Diversification Opportunities for Metall Zug and Logitech International

0.45

Correlation Coefficient

Metall Zug  Logitech International

Very weak diversification

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

Pair Corralation between Metall Zug and Logitech International

Assuming the 90 days trading horizon Metall Zug AG is expected to under-perform the Logitech International. But the stock apears to be less risky and, when comparing its historical volatility, Metall Zug AG is 1.25 times less risky than Logitech International. The stock trades about -0.08 of its potential returns per unit of risk. The Logitech International SA is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  7,561  in Logitech International SA on August 30, 2024 and sell it today you would lose (555.00) from holding Logitech International SA or give up 7.34% of portfolio value over 90 days.

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

Metall Zug AG  vs.  Logitech International SA

Metall Zug AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metall Zug 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.

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.

Pair Trading with Metall Zug and Logitech International

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

The idea behind Metall Zug AG and Logitech International SA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.