Correlation Between EFG International and Klingelnberg

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

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

Diversification Opportunities for EFG International and Klingelnberg

0.83

Correlation Coefficient

EFG International  Klingelnberg

Very poor diversification

The 3 months correlation between EFG and Klingelnberg is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding EFG International AG and Klingelnberg AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klingelnberg AG and EFG International 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 EFG International AG are associated (or correlated) with Klingelnberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klingelnberg AG has no effect on the direction of EFG International i.e., EFG International and Klingelnberg go up and down completely randomly.

Pair Corralation between EFG International and Klingelnberg

Assuming the 90 days trading horizon EFG International AG is expected to generate 0.6 times more return on investment than Klingelnberg. However, EFG International AG is 1.67 times less risky than Klingelnberg. It trades about 0.38 of its potential returns per unit of risk. Klingelnberg AG is currently generating about 0.16 per unit of risk. If you would invest  1,176  in EFG International AG on April 23, 2025 and sell it today you would earn a total of  432.00  from holding EFG International AG or generate 36.73% return on investment over 90 days.

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

EFG International AG  vs.  Klingelnberg AG

EFG International

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in EFG International AG are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EFG International showed solid returns over the last few months and may actually be approaching a breakup point.

Klingelnberg AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Klingelnberg AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Klingelnberg showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EFG International and Klingelnberg

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

The idea behind EFG International AG and Klingelnberg 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.