Correlation Between Swiss Life and Galenica Sante

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

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

Diversification Opportunities for Swiss Life and Galenica Sante

0.42

Correlation Coefficient

Swiss Life  Galenica Sante

Very weak diversification

The 3 months correlation between Swiss and Galenica is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and Galenica Sante AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galenica Sante AG and Swiss Life 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 Swiss Life Holding are associated (or correlated) with Galenica Sante. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galenica Sante AG has no effect on the direction of Swiss Life i.e., Swiss Life and Galenica Sante go up and down completely randomly.

Pair Corralation between Swiss Life and Galenica Sante

Assuming the 90 days trading horizon Swiss Life Holding is expected to under-perform the Galenica Sante. In addition to that, Swiss Life is 1.14 times more volatile than Galenica Sante AG. It trades about -0.01 of its total potential returns per unit of risk. Galenica Sante AG is currently generating about 0.03 per unit of volatility. If you would invest  7,435  in Galenica Sante AG on September 13, 2024 and sell it today you would earn a total of  95.00  from holding Galenica Sante AG or generate 1.28% return on investment over 90 days.

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

Swiss Life Holding  vs.  Galenica Sante AG

Swiss Life Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swiss Life Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Swiss Life is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Galenica Sante AG

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Galenica Sante AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Galenica Sante is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Swiss Life and Galenica Sante

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

The idea behind Swiss Life Holding and Galenica Sante 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.