Correlation Between Telus Corp and SwissCom

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

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

Diversification Opportunities for Telus Corp and SwissCom

0.82

Correlation Coefficient

Telus Corp  SwissCom

Very poor diversification

The 3 months correlation between Telus and SwissCom is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Telus Corp and SwissCom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SwissCom AG and Telus Corp 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 Telus Corp 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 Telus Corp i.e., Telus Corp and SwissCom go up and down completely randomly.

Pair Corralation between Telus Corp and SwissCom

Allowing for the 90-day total investment horizon Telus Corp is expected to generate 0.95 times more return on investment than SwissCom. However, Telus Corp is 1.05 times less risky than SwissCom. It trades about -0.17 of its potential returns per unit of risk. SwissCom AG is currently generating about -0.18 per unit of risk. If you would invest  1,664  in Telus Corp on September 14, 2024 and sell it today you would lose (189.00) from holding Telus Corp or give up 11.36% of portfolio value over 90 days.

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

Telus Corp  vs.  SwissCom AG

Telus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Telus Corp and SwissCom

The main advantage of trading using opposite Telus Corp and SwissCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telus Corp 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 Telus Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.