Correlation Between Burckhardt Compression and Elma Electronic

Can any of the company-specific risk be diversified away by investing in both Burckhardt Compression and Elma Electronic 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 Burckhardt Compression and Elma Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Burckhardt Compression and Elma Electronic

0.87

Correlation Coefficient

Burckhardt Compression  Elma Electronic

Very poor diversification

The 3 months correlation between Burckhardt and Elma is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Burckhardt Compression and Elma Electronic AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elma Electronic AG and Burckhardt Compression 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 Burckhardt Compression are associated (or correlated) with Elma Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elma Electronic AG has no effect on the direction of Burckhardt Compression i.e., Burckhardt Compression and Elma Electronic go up and down completely randomly.

Pair Corralation between Burckhardt Compression and Elma Electronic

Assuming the 90 days trading horizon Burckhardt Compression is expected to generate 1.9 times more return on investment than Elma Electronic. However, Burckhardt Compression is 1.9 times more volatile than Elma Electronic AG. It trades about 0.38 of its potential returns per unit of risk. Elma Electronic AG is currently generating about 0.41 per unit of risk. If you would invest  52,125  in Burckhardt Compression on April 25, 2025 and sell it today you would earn a total of  18,375  from holding Burckhardt Compression or generate 35.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	36.07%
Values	Daily Returns

Burckhardt Compression  vs.  Elma Electronic AG

Burckhardt Compression

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Burckhardt Compression are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Burckhardt Compression showed solid returns over the last few months and may actually be approaching a breakup point.

Elma Electronic AG

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Elma Electronic AG are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Elma Electronic showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Burckhardt Compression and Elma Electronic

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

The idea behind Burckhardt Compression and Elma Electronic 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.