Correlation Between Lumen Technologies and SwissCom

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

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

Diversification Opportunities for Lumen Technologies and SwissCom

-0.58

Correlation Coefficient

Lumen Technologies  SwissCom

Excellent diversification

The 3 months correlation between Lumen and SwissCom is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies and SwissCom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SwissCom AG and Lumen Technologies 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 Lumen Technologies 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 Lumen Technologies i.e., Lumen Technologies and SwissCom go up and down completely randomly.

Pair Corralation between Lumen Technologies and SwissCom

Given the investment horizon of 90 days Lumen Technologies is expected to generate 4.07 times more return on investment than SwissCom. However, Lumen Technologies is 4.07 times more volatile than SwissCom AG. It trades about 0.04 of its potential returns per unit of risk. SwissCom AG is currently generating about -0.14 per unit of risk. If you would invest  599.00  in Lumen Technologies on September 12, 2024 and sell it today you would earn a total of  24.00  from holding Lumen Technologies or generate 4.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Lumen Technologies  vs.  SwissCom AG

Lumen Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lumen Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Lumen Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Lumen Technologies and SwissCom

The main advantage of trading using opposite Lumen Technologies and SwissCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumen Technologies 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 Lumen Technologies 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.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.