Correlation Between Zug Estates and Sika AG

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

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

Diversification Opportunities for Zug Estates and Sika AG

-0.72

Correlation Coefficient

Zug Estates  Sika AG

Pay attention - limited upside

The 3 months correlation between Zug and Sika is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Zug Estates Holding and Sika AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sika AG and Zug Estates 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 Zug Estates Holding are associated (or correlated) with Sika AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sika AG has no effect on the direction of Zug Estates i.e., Zug Estates and Sika AG go up and down completely randomly.

Pair Corralation between Zug Estates and Sika AG

Assuming the 90 days trading horizon Zug Estates Holding is expected to generate 0.89 times more return on investment than Sika AG. However, Zug Estates Holding is 1.13 times less risky than Sika AG. It trades about 0.12 of its potential returns per unit of risk. Sika AG is currently generating about -0.21 per unit of risk. If you would invest  182,000  in Zug Estates Holding on August 31, 2024 and sell it today you would earn a total of  16,000  from holding Zug Estates Holding or generate 8.79% return on investment over 90 days.

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

Zug Estates Holding  vs.  Sika AG

Zug Estates Holding

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zug Estates Holding are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zug Estates may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Sika AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sika AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Zug Estates and Sika AG

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

The idea behind Zug Estates Holding and Sika 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 Global Correlations module to find global opportunities by holding instruments from different markets.