Correlation Between PICC Property and Swiss Life

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

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

Diversification Opportunities for PICC Property and Swiss Life

-0.18

Correlation Coefficient

PICC Property  Swiss Life

Good diversification

The 3 months correlation between PICC and Swiss is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding PICC Property and and Swiss Life Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Life Holding and PICC Property 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 PICC Property and are associated (or correlated) with Swiss Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Life Holding has no effect on the direction of PICC Property i.e., PICC Property and Swiss Life go up and down completely randomly.

Pair Corralation between PICC Property and Swiss Life

Assuming the 90 days horizon PICC Property and is expected to generate 2.87 times more return on investment than Swiss Life. However, PICC Property is 2.87 times more volatile than Swiss Life Holding. It trades about 0.09 of its potential returns per unit of risk. Swiss Life Holding is currently generating about 0.04 per unit of risk. If you would invest  3,233  in PICC Property and on September 3, 2024 and sell it today you would earn a total of  629.00  from holding PICC Property and or generate 19.46% return on investment over 90 days.

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

PICC Property and  vs.  Swiss Life Holding

PICC Property

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PICC Property and are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, PICC Property showed solid returns over the last few months and may actually be approaching a breakup point.

Swiss Life Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Life Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Swiss Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PICC Property and Swiss Life

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

The idea behind PICC Property and and Swiss Life Holding 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.