Correlation Between Zumtobel Group and Polytec Holding

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

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

Diversification Opportunities for Zumtobel Group and Polytec Holding

0.39

Correlation Coefficient

Zumtobel Group  Polytec Holding

Weak diversification

The 3 months correlation between Zumtobel and Polytec is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Zumtobel Group AG and Polytec Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polytec Holding AG and Zumtobel Group 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 Zumtobel Group AG are associated (or correlated) with Polytec Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polytec Holding AG has no effect on the direction of Zumtobel Group i.e., Zumtobel Group and Polytec Holding go up and down completely randomly.

Pair Corralation between Zumtobel Group and Polytec Holding

Assuming the 90 days trading horizon Zumtobel Group AG is expected to generate 0.93 times more return on investment than Polytec Holding. However, Zumtobel Group AG is 1.08 times less risky than Polytec Holding. It trades about 0.0 of its potential returns per unit of risk. Polytec Holding AG is currently generating about -0.05 per unit of risk. If you would invest  649.00  in Zumtobel Group AG on March 21, 2024 and sell it today you would lose (31.00) from holding Zumtobel Group AG or give up 4.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Zumtobel Group AG  vs.  Polytec Holding AG

Zumtobel Group AG

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zumtobel Group AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical and fundamental indicators, Zumtobel Group may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Polytec Holding AG

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Polytec Holding AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Polytec Holding may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Zumtobel Group and Polytec Holding

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

The idea behind Zumtobel Group AG and Polytec Holding 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.