Correlation Between Schneider Electric and Aumann AG

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

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

Diversification Opportunities for Schneider Electric and Aumann AG

-0.2

Correlation Coefficient

Schneider Electric  Aumann AG

Good diversification

The 3 months correlation between Schneider and Aumann is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SA and Aumann AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aumann AG 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 SA are associated (or correlated) with Aumann AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aumann AG has no effect on the direction of Schneider Electric i.e., Schneider Electric and Aumann AG go up and down completely randomly.

Pair Corralation between Schneider Electric and Aumann AG

Assuming the 90 days horizon Schneider Electric SA is expected to generate 1.58 times more return on investment than Aumann AG. However, Schneider Electric is 1.58 times more volatile than Aumann AG. It trades about 0.01 of its potential returns per unit of risk. Aumann AG is currently generating about -0.11 per unit of risk. If you would invest  5,010  in Schneider Electric SA on August 31, 2024 and sell it today you would earn a total of  17.00  from holding Schneider Electric SA or generate 0.34% return on investment over 90 days.

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

Schneider Electric SA  vs.  Aumann AG

Schneider Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schneider Electric SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Schneider Electric is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Aumann AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aumann AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Schneider Electric and Aumann AG

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

The idea behind Schneider Electric SA and Aumann 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 Transaction History module to view history of all your transactions and understand their impact on performance.