Correlation Between Schneider Electric and Schindler Holding

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

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

Diversification Opportunities for Schneider Electric and Schindler Holding

-0.49

Correlation Coefficient

Schneider Electric  Schindler Holding

Very good diversification

The 3 months correlation between Schneider and Schindler is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and Schindler Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schindler Holding and Schneider Electric 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 Schneider Electric SE are associated (or correlated) with Schindler Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schindler Holding has no effect on the direction of Schneider Electric i.e., Schneider Electric and Schindler Holding go up and down completely randomly.

Pair Corralation between Schneider Electric and Schindler Holding

Assuming the 90 days horizon Schneider Electric SE is expected to under-perform the Schindler Holding. In addition to that, Schneider Electric is 3.81 times more volatile than Schindler Holding AG. It trades about -0.04 of its total potential returns per unit of risk. Schindler Holding AG is currently generating about 0.04 per unit of volatility. If you would invest  28,313  in Schindler Holding AG on September 24, 2024 and sell it today you would earn a total of  387.00  from holding Schindler Holding AG or generate 1.37% return on investment over 90 days.

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

Schneider Electric SE  vs.  Schindler Holding AG

Schneider Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schneider Electric SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Schneider Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Schindler Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Schindler Holding AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Schindler Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Schneider Electric and Schindler Holding

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

The idea behind Schneider Electric SE and Schindler 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.