Correlation Between Schindler Holding and Techtronic Industries

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

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

Diversification Opportunities for Schindler Holding and Techtronic Industries

-0.31

Correlation Coefficient

Schindler Holding  Techtronic Industries

Very good diversification

The 3 months correlation between Schindler and Techtronic is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Schindler Holding AG and Techtronic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techtronic Industries and Schindler Holding 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 Schindler Holding AG are associated (or correlated) with Techtronic Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techtronic Industries has no effect on the direction of Schindler Holding i.e., Schindler Holding and Techtronic Industries go up and down completely randomly.

Pair Corralation between Schindler Holding and Techtronic Industries

Assuming the 90 days horizon Schindler Holding AG is expected to under-perform the Techtronic Industries. But the pink sheet apears to be less risky and, when comparing its historical volatility, Schindler Holding AG is 4.37 times less risky than Techtronic Industries. The pink sheet trades about -0.19 of its potential returns per unit of risk. The Techtronic Industries is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,353  in Techtronic Industries on September 24, 2024 and sell it today you would lose (15.00) from holding Techtronic Industries or give up 1.11% of portfolio value over 90 days.

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

Schindler Holding AG  vs.  Techtronic Industries

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.

Techtronic Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Schindler Holding and Techtronic Industries

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

The idea behind Schindler Holding AG and Techtronic Industries 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.