Correlation Between Elma Electronic and EMS CHEMIE

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

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

Diversification Opportunities for Elma Electronic and EMS CHEMIE

-0.87

Correlation Coefficient

Elma Electronic  EMS CHEMIE

Pay attention - limited upside

The 3 months correlation between Elma and EMS is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Elma Electronic AG and EMS CHEMIE HOLDING AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMS CHEMIE HOLDING and Elma Electronic 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 Elma Electronic AG are associated (or correlated) with EMS CHEMIE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMS CHEMIE HOLDING has no effect on the direction of Elma Electronic i.e., Elma Electronic and EMS CHEMIE go up and down completely randomly.

Pair Corralation between Elma Electronic and EMS CHEMIE

Assuming the 90 days trading horizon Elma Electronic AG is expected to generate 0.89 times more return on investment than EMS CHEMIE. However, Elma Electronic AG is 1.13 times less risky than EMS CHEMIE. It trades about 0.26 of its potential returns per unit of risk. EMS CHEMIE HOLDING AG is currently generating about -0.18 per unit of risk. If you would invest  120,000  in Elma Electronic AG on September 5, 2025 and sell it today you would earn a total of  7,000  from holding Elma Electronic AG or generate 5.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	41.54%
Values	Daily Returns

Elma Electronic AG  vs.  EMS CHEMIE HOLDING AG

Elma Electronic AG

Risk-Adjusted Performance

Solid

Over the last 90 days Elma Electronic AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Elma Electronic showed solid returns over the last few months and may actually be approaching a breakup point.

EMS CHEMIE HOLDING

Risk-Adjusted Performance

Weakest

Over the last 90 days EMS CHEMIE HOLDING AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Elma Electronic and EMS CHEMIE

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

The idea behind Elma Electronic AG and EMS CHEMIE 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.