Correlation Between Swatch Group and Swisscom
Can any of the company-specific risk be diversified away by investing in both Swatch Group 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 Swatch Group and Swisscom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swatch Group AG and Swisscom AG, you can compare the effects of market volatilities on Swatch Group 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 Swatch Group with a short position of Swisscom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swatch Group and Swisscom.
Diversification Opportunities for Swatch Group and Swisscom
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Swatch and Swisscom is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Swatch Group AG and Swisscom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swisscom AG and Swatch Group 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 Swatch Group AG 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 Swatch Group i.e., Swatch Group and Swisscom go up and down completely randomly.
Pair Corralation between Swatch Group and Swisscom
Assuming the 90 days trading horizon Swatch Group AG is expected to generate 2.89 times more return on investment than Swisscom. However, Swatch Group is 2.89 times more volatile than Swisscom AG. It trades about 0.05 of its potential returns per unit of risk. Swisscom AG is currently generating about -0.15 per unit of risk. If you would invest 15,405 in Swatch Group AG on September 17, 2024 and sell it today you would earn a total of 1,065 from holding Swatch Group AG or generate 6.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Swatch Group AG vs. Swisscom AG
Performance |
Timeline |
Swatch Group AG |
Swisscom AG |
Swatch Group and Swisscom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Swatch Group and Swisscom
The main advantage of trading using opposite Swatch Group and Swisscom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swatch Group 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.Swatch Group vs. Compagnie Financire Richemont | Swatch Group vs. Swiss Life Holding | Swatch Group vs. Swisscom AG | Swatch Group vs. Swiss Re AG |
Swisscom vs. Swiss Life Holding | Swisscom vs. Zurich Insurance Group | Swisscom vs. Swiss Re AG | Swisscom vs. ABB |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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