Correlation Between PSP Swiss and Warteck Invest

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

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

Diversification Opportunities for PSP Swiss and Warteck Invest

0.69

Correlation Coefficient

PSP Swiss  Warteck Invest

Poor diversification

The 3 months correlation between PSP and Warteck is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PSP Swiss Property and Warteck Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warteck Invest and PSP Swiss 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 PSP Swiss Property are associated (or correlated) with Warteck Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warteck Invest has no effect on the direction of PSP Swiss i.e., PSP Swiss and Warteck Invest go up and down completely randomly.

Pair Corralation between PSP Swiss and Warteck Invest

Assuming the 90 days trading horizon PSP Swiss is expected to generate 75.48 times less return on investment than Warteck Invest. But when comparing it to its historical volatility, PSP Swiss Property is 1.23 times less risky than Warteck Invest. It trades about 0.01 of its potential returns per unit of risk. Warteck Invest is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest  175,000  in Warteck Invest on September 28, 2024 and sell it today you would earn a total of  17,000  from holding Warteck Invest or generate 9.71% return on investment over 90 days.

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

PSP Swiss Property  vs.  Warteck Invest

PSP Swiss Property

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PSP Swiss Property are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, PSP Swiss is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Warteck Invest

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Warteck Invest are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Warteck Invest may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PSP Swiss and Warteck Invest

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

The idea behind PSP Swiss Property and Warteck Invest 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.