Correlation Between Clariant and EMS CHEMIE

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

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

Diversification Opportunities for Clariant and EMS CHEMIE

0.72

Correlation Coefficient

Clariant  EMS CHEMIE

Poor diversification

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

Pair Corralation between Clariant and EMS CHEMIE

Assuming the 90 days trading horizon Clariant is expected to generate 1.87 times less return on investment than EMS CHEMIE. In addition to that, Clariant is 1.44 times more volatile than EMS CHEMIE HOLDING AG. It trades about 0.05 of its total potential returns per unit of risk. EMS CHEMIE HOLDING AG is currently generating about 0.14 per unit of volatility. If you would invest  57,100  in EMS CHEMIE HOLDING AG on April 22, 2025 and sell it today you would earn a total of  6,700  from holding EMS CHEMIE HOLDING AG or generate 11.73% return on investment over 90 days.

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

Clariant AG  vs.  EMS CHEMIE HOLDING AG

Clariant AG

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clariant AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Clariant may actually be approaching a critical reversion point that can send shares even higher in August 2025.

EMS CHEMIE HOLDING

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMS CHEMIE HOLDING AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EMS CHEMIE may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Clariant and EMS CHEMIE

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

The idea behind Clariant AG and EMS CHEMIE HOLDING 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.