Correlation Between Astar and Swatch
Can any of the company-specific risk be diversified away by investing in both Astar and Swatch 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 Astar and Swatch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and The Swatch Group, you can compare the effects of market volatilities on Astar and Swatch 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 Astar with a short position of Swatch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Swatch.
Diversification Opportunities for Astar and Swatch
Very good diversification
The 3 months correlation between Astar and Swatch is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Astar and The Swatch Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group and Astar 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 Astar are associated (or correlated) with Swatch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group has no effect on the direction of Astar i.e., Astar and Swatch go up and down completely randomly.
Pair Corralation between Astar and Swatch
Assuming the 90 days trading horizon Astar is expected to under-perform the Swatch. In addition to that, Astar is 2.03 times more volatile than The Swatch Group. It trades about -0.13 of its total potential returns per unit of risk. The Swatch Group is currently generating about 0.01 per unit of volatility. If you would invest 820.00 in The Swatch Group on October 28, 2024 and sell it today you would lose (5.00) from holding The Swatch Group or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.37% |
| Values | Daily Returns |
Astar vs. The Swatch Group
Performance |
| Timeline |
| Astar |
| Swatch Group |
Astar and Swatch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Swatch
The main advantage of trading using opposite Astar and Swatch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Swatch 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 Swatch will offset losses from the drop in Swatch's long position.The idea behind Astar and The Swatch Group 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.| Swatch vs. BRIT AMER TOBACCO | Swatch vs. NORTHEAST UTILITIES | Swatch vs. United Utilities Group | Swatch vs. Constellation Software |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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