Correlation Between HBM Healthcare and Swiss Leader
Can any of the company-specific risk be diversified away by investing in both HBM Healthcare and Swiss Leader 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 HBM Healthcare and Swiss Leader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HBM Healthcare Investments and Swiss Leader Price, you can compare the effects of market volatilities on HBM Healthcare and Swiss Leader 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 HBM Healthcare with a short position of Swiss Leader. Check out your portfolio center. Please also check ongoing floating volatility patterns of HBM Healthcare and Swiss Leader.
Diversification Opportunities for HBM Healthcare and Swiss Leader
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HBM and Swiss is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding HBM Healthcare Investments and Swiss Leader Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Leader Price and HBM Healthcare 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 HBM Healthcare Investments are associated (or correlated) with Swiss Leader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Leader Price has no effect on the direction of HBM Healthcare i.e., HBM Healthcare and Swiss Leader go up and down completely randomly.
Pair Corralation between HBM Healthcare and Swiss Leader
Assuming the 90 days trading horizon HBM Healthcare Investments is expected to generate 2.52 times more return on investment than Swiss Leader. However, HBM Healthcare is 2.52 times more volatile than Swiss Leader Price. It trades about 0.05 of its potential returns per unit of risk. Swiss Leader Price is currently generating about 0.04 per unit of risk. If you would invest 17,700 in HBM Healthcare Investments on October 24, 2024 and sell it today you would earn a total of 1,060 from holding HBM Healthcare Investments or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HBM Healthcare Investments vs. Swiss Leader Price
Performance |
| Timeline |
HBM Healthcare and Swiss Leader Volatility Contrast
Predicted Return Density |
| Returns |
HBM Healthcare Investments
Pair trading matchups for HBM Healthcare
Swiss Leader Price
Pair trading matchups for Swiss Leader
Pair Trading with HBM Healthcare and Swiss Leader
The main advantage of trading using opposite HBM Healthcare and Swiss Leader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HBM Healthcare position performs unexpectedly, Swiss Leader 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 Swiss Leader will offset losses from the drop in Swiss Leader's long position.| HBM Healthcare vs. BB Biotech AG | HBM Healthcare vs. Partners Group Holding | HBM Healthcare vs. Tecan Group AG | HBM Healthcare vs. VAT Group AG |
| Swiss Leader vs. Berner Kantonalbank AG | Swiss Leader vs. HBM Healthcare Investments | Swiss Leader vs. Elma Electronic AG | Swiss Leader vs. Liechtensteinische Landesbank AG |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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