Correlation Between PSP Swiss and HIAG Immobilien

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Can any of the company-specific risk be diversified away by investing in both PSP Swiss and HIAG Immobilien 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 PSP Swiss and HIAG Immobilien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PSP Swiss Property and HIAG Immobilien Holding, you can compare the effects of market volatilities on PSP Swiss and HIAG Immobilien 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 PSP Swiss with a short position of HIAG Immobilien. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSP Swiss and HIAG Immobilien.

Diversification Opportunities for PSP Swiss and HIAG Immobilien

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between PSP and HIAG is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding PSP Swiss Property and HIAG Immobilien Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HIAG Immobilien Holding and PSP Swiss 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 PSP Swiss Property are associated (or correlated) with HIAG Immobilien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HIAG Immobilien Holding has no effect on the direction of PSP Swiss i.e., PSP Swiss and HIAG Immobilien go up and down completely randomly.

Pair Corralation between PSP Swiss and HIAG Immobilien

Assuming the 90 days trading horizon PSP Swiss Property is expected to generate 1.22 times more return on investment than HIAG Immobilien. However, PSP Swiss is 1.22 times more volatile than HIAG Immobilien Holding. It trades about 0.06 of its potential returns per unit of risk. HIAG Immobilien Holding is currently generating about 0.04 per unit of risk. If you would invest  12,370  in PSP Swiss Property on August 29, 2024 and sell it today you would earn a total of  120.00  from holding PSP Swiss Property or generate 0.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

PSP Swiss Property  vs.  HIAG Immobilien Holding

 Performance 
       Timeline  
PSP Swiss Property 

Risk-Adjusted Performance

3 of 100

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

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in HIAG Immobilien Holding are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, HIAG Immobilien is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

PSP Swiss and HIAG Immobilien Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PSP Swiss and HIAG Immobilien

The main advantage of trading using opposite PSP Swiss and HIAG Immobilien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSP Swiss position performs unexpectedly, HIAG Immobilien 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 HIAG Immobilien will offset losses from the drop in HIAG Immobilien's long position.
The idea behind PSP Swiss Property and HIAG Immobilien 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.
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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