Correlation Between Carrefour and SwissCom
Can any of the company-specific risk be diversified away by investing in both Carrefour 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 Carrefour and SwissCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carrefour SA PK and SwissCom AG, you can compare the effects of market volatilities on Carrefour 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 Carrefour with a short position of SwissCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrefour and SwissCom.
Diversification Opportunities for Carrefour and SwissCom
Poor diversification
The 3 months correlation between Carrefour and SwissCom is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Carrefour SA PK and SwissCom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SwissCom AG and Carrefour 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 Carrefour SA PK 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 Carrefour i.e., Carrefour and SwissCom go up and down completely randomly.
Pair Corralation between Carrefour and SwissCom
Assuming the 90 days horizon Carrefour SA PK is expected to under-perform the SwissCom. In addition to that, Carrefour is 1.63 times more volatile than SwissCom AG. It trades about -0.03 of its total potential returns per unit of risk. SwissCom AG is currently generating about 0.01 per unit of volatility. If you would invest 5,652 in SwissCom AG on September 12, 2024 and sell it today you would earn a total of 85.00 from holding SwissCom AG or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Carrefour SA PK vs. SwissCom AG
Performance |
| Timeline |
| Carrefour SA PK |
| SwissCom AG |
Carrefour and SwissCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carrefour and SwissCom
The main advantage of trading using opposite Carrefour and SwissCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrefour 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.| Carrefour vs. Natural Grocers by | Carrefour vs. Grocery Outlet Holding | Carrefour vs. Village Super Market | Carrefour vs. Ingles Markets Incorporated |
| SwissCom vs. Telecom Argentina SA | SwissCom vs. Rogers Communications | SwissCom vs. Magyar Telekom Plc | SwissCom vs. Hellenic Telecommunications Org |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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