Correlation Between Emmi AG and Belimo Holding

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

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

Diversification Opportunities for Emmi AG and Belimo Holding

0.05

Correlation Coefficient

Emmi AG  Belimo Holding

Significant diversification

The 3 months correlation between Emmi and Belimo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Emmi AG and Belimo Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belimo Holding and Emmi AG 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 Emmi AG are associated (or correlated) with Belimo Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belimo Holding has no effect on the direction of Emmi AG i.e., Emmi AG and Belimo Holding go up and down completely randomly.

Pair Corralation between Emmi AG and Belimo Holding

Assuming the 90 days trading horizon Emmi AG is expected to under-perform the Belimo Holding. But the stock apears to be less risky and, when comparing its historical volatility, Emmi AG is 2.29 times less risky than Belimo Holding. The stock trades about -0.06 of its potential returns per unit of risk. The Belimo Holding is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  55,250  in Belimo Holding on April 23, 2025 and sell it today you would earn a total of  34,800  from holding Belimo Holding or generate 62.99% return on investment over 90 days.

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

Emmi AG  vs.  Belimo Holding

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.

Belimo Holding

Risk-Adjusted Performance

Strong

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

Pair Trading with Emmi AG and Belimo Holding

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

The idea behind Emmi AG and Belimo Holding 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.