Correlation Between Baloise Holding and Sulzer AG
Can any of the company-specific risk be diversified away by investing in both Baloise Holding and Sulzer AG 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 Baloise Holding and Sulzer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baloise Holding AG and Sulzer AG, you can compare the effects of market volatilities on Baloise Holding and Sulzer AG 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 Baloise Holding with a short position of Sulzer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baloise Holding and Sulzer AG.
Diversification Opportunities for Baloise Holding and Sulzer AG
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baloise and Sulzer is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG and Sulzer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sulzer AG and Baloise Holding 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 Baloise Holding AG are associated (or correlated) with Sulzer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sulzer AG has no effect on the direction of Baloise Holding i.e., Baloise Holding and Sulzer AG go up and down completely randomly.
Pair Corralation between Baloise Holding and Sulzer AG
Assuming the 90 days trading horizon Baloise Holding AG is expected to generate 0.8 times more return on investment than Sulzer AG. However, Baloise Holding AG is 1.25 times less risky than Sulzer AG. It trades about -0.18 of its potential returns per unit of risk. Sulzer AG is currently generating about -0.17 per unit of risk. If you would invest 17,490 in Baloise Holding AG on August 28, 2024 and sell it today you would lose (760.00) from holding Baloise Holding AG or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baloise Holding AG vs. Sulzer AG
Performance |
| Timeline |
| Baloise Holding AG |
| Sulzer AG |
Baloise Holding and Sulzer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baloise Holding and Sulzer AG
The main advantage of trading using opposite Baloise Holding and Sulzer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baloise Holding position performs unexpectedly, Sulzer AG 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 Sulzer AG will offset losses from the drop in Sulzer AG's long position.| Baloise Holding vs. Swiss Life Holding | Baloise Holding vs. Helvetia Holding AG | Baloise Holding vs. Swisscom AG | Baloise Holding vs. Zurich Insurance Group |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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