Correlation Between Belimo Holding and Emmi AG

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

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

Diversification Opportunities for Belimo Holding and Emmi AG

-0.34

Correlation Coefficient

Belimo Holding  Emmi AG

Very good diversification

The 3 months correlation between Belimo and Emmi is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Belimo Holding and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG and Belimo 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 Belimo Holding are associated (or correlated) with Emmi AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emmi AG has no effect on the direction of Belimo Holding i.e., Belimo Holding and Emmi AG go up and down completely randomly.

Pair Corralation between Belimo Holding and Emmi AG

Assuming the 90 days trading horizon Belimo Holding is expected to generate 1.66 times more return on investment than Emmi AG. However, Belimo Holding is 1.66 times more volatile than Emmi AG. It trades about 0.4 of its potential returns per unit of risk. Emmi AG is currently generating about -0.06 per unit of risk. If you would invest  62,100  in Belimo Holding on April 24, 2025 and sell it today you would earn a total of  28,750  from holding Belimo Holding or generate 46.3% return on investment over 90 days.

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

Belimo Holding  vs.  Emmi AG

Belimo Holding

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Belimo Holding are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Belimo Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Emmi AG

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Belimo Holding and Emmi AG

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

The idea behind Belimo Holding and Emmi 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.