Correlation Between Sonova Holding and Armm

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

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

Diversification Opportunities for Sonova Holding and Armm

-0.26

Correlation Coefficient

Sonova Holding  Armm

Very good diversification

The 3 months correlation between Sonova and Armm is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sonova Holding AG and Armm Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armm Inc and Sonova 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 Sonova Holding AG are associated (or correlated) with Armm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armm Inc has no effect on the direction of Sonova Holding i.e., Sonova Holding and Armm go up and down completely randomly.

Pair Corralation between Sonova Holding and Armm

Assuming the 90 days horizon Sonova Holding is expected to generate 53763.33 times less return on investment than Armm. But when comparing it to its historical volatility, Sonova Holding AG is 52.82 times less risky than Armm. It trades about 0.0 of its potential returns per unit of risk. Armm Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Armm Inc on March 13, 2024 and sell it today you would earn a total of  0.97  from holding Armm Inc or generate 3233.33% return on investment over 90 days.

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

Sonova Holding AG  vs.  Armm Inc

Sonova Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonova Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sonova Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Armm Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Armm Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Armm displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonova Holding and Armm

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

The idea behind Sonova Holding AG and Armm Inc 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.