Correlation Between Swiss Prime and Allreal Holding

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

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

Diversification Opportunities for Swiss Prime and Allreal Holding

0.46

Correlation Coefficient

Swiss Prime  Allreal Holding

Very weak diversification

The 3 months correlation between Swiss and Allreal is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Prime Site and Allreal Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allreal Holding and Swiss Prime 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 Prime Site are associated (or correlated) with Allreal Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allreal Holding has no effect on the direction of Swiss Prime i.e., Swiss Prime and Allreal Holding go up and down completely randomly.

Pair Corralation between Swiss Prime and Allreal Holding

Assuming the 90 days trading horizon Swiss Prime Site is expected to generate 0.99 times more return on investment than Allreal Holding. However, Swiss Prime Site is 1.01 times less risky than Allreal Holding. It trades about 0.05 of its potential returns per unit of risk. Allreal Holding is currently generating about 0.05 per unit of risk. If you would invest  8,411  in Swiss Prime Site on February 17, 2024 and sell it today you would earn a total of  159.00  from holding Swiss Prime Site or generate 1.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Swiss Prime Site  vs.  Allreal Holding

Swiss Prime Site

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Prime Site are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Swiss Prime is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Allreal Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Allreal Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Allreal Holding 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 Prime and Allreal Holding

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

The idea behind Swiss Prime Site and Allreal 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.