Correlation Between Forbo Holding and Geberit AG

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

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

Diversification Opportunities for Forbo Holding and Geberit AG

0.8

Correlation Coefficient

Forbo Holding  Geberit AG

Very poor diversification

The 3 months correlation between Forbo and Geberit is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Forbo Holding AG and Geberit AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geberit AG and Forbo 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 Forbo Holding AG are associated (or correlated) with Geberit AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geberit AG has no effect on the direction of Forbo Holding i.e., Forbo Holding and Geberit AG go up and down completely randomly.

Pair Corralation between Forbo Holding and Geberit AG

Assuming the 90 days trading horizon Forbo Holding AG is expected to generate 1.95 times more return on investment than Geberit AG. However, Forbo Holding is 1.95 times more volatile than Geberit AG. It trades about 0.16 of its potential returns per unit of risk. Geberit AG is currently generating about 0.23 per unit of risk. If you would invest  74,700  in Forbo Holding AG on April 22, 2025 and sell it today you would earn a total of  15,000  from holding Forbo Holding AG or generate 20.08% return on investment over 90 days.

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

Forbo Holding AG  vs.  Geberit AG

Forbo Holding AG

Risk-Adjusted Performance

Good

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

Geberit AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Geberit AG are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Geberit AG showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forbo Holding and Geberit AG

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

The idea behind Forbo Holding AG and Geberit 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.