Correlation Between Compagnie Financire and Swisscom

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

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

Diversification Opportunities for Compagnie Financire and Swisscom

0.14

Correlation Coefficient

Compagnie Financire  Swisscom

Average diversification

The 3 months correlation between Compagnie and Swisscom is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont and Swisscom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swisscom AG and Compagnie Financire 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 Compagnie Financire Richemont are associated (or correlated) with Swisscom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swisscom AG has no effect on the direction of Compagnie Financire i.e., Compagnie Financire and Swisscom go up and down completely randomly.

Pair Corralation between Compagnie Financire and Swisscom

Assuming the 90 days trading horizon Compagnie Financire Richemont is expected to generate 2.26 times more return on investment than Swisscom. However, Compagnie Financire is 2.26 times more volatile than Swisscom AG. It trades about 0.13 of its potential returns per unit of risk. Swisscom AG is currently generating about -0.15 per unit of risk. If you would invest  11,706  in Compagnie Financire Richemont on September 17, 2024 and sell it today you would earn a total of  1,924  from holding Compagnie Financire Richemont or generate 16.44% return on investment over 90 days.

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

Compagnie Financire Richemont  vs.  Swisscom AG

Compagnie Financire

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financire Richemont are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Compagnie Financire showed solid returns over the last few months and may actually be approaching a breakup point.

Swisscom AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swisscom 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 Compagnie Financire and Swisscom

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

The idea behind Compagnie Financire Richemont and Swisscom 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.