Can any of the company-specific risk be diversified away by investing in both Komax Holding and Ascom 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 Komax Holding and Ascom Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Komax Holding AG and Ascom Holding AG, you can compare the effects of market volatilities on Komax Holding and Ascom 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 Komax Holding with a short position of Ascom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Komax Holding and Ascom Holding.
Diversification Opportunities for Komax Holding and Ascom Holding
The 3 months correlation between Komax and Ascom is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Komax Holding AG and Ascom Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascom Holding AG and Komax 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 Komax Holding AG are associated (or correlated) with Ascom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascom Holding AG has no effect on the direction of Komax Holding i.e., Komax Holding and Ascom Holding go up and down completely randomly.
Pair Corralation between Komax Holding and Ascom Holding
Assuming the 90 days trading horizon Komax Holding AG is expected to under-perform the Ascom Holding. In addition to that, Komax Holding is 1.05 times more volatile than Ascom Holding AG. It trades about -0.04 of its total potential returns per unit of risk. Ascom Holding AG is currently generating about 0.28 per unit of volatility. If you would invest 771.00 in Ascom Holding AG on March 6, 2024 and sell it today you would earn a total of 43.00 from holding Ascom Holding AG or generate 5.58% return on investment over 90 days.
Over the last 90 days Komax Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Komax Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Compared to the overall equity markets, risk-adjusted returns on investments in Ascom Holding AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ascom Holding may actually be approaching a critical reversion point that can send shares even higher in July 2024.