Correlation Between Schweizer Electronic and BII Railway
Can any of the company-specific risk be diversified away by investing in both Schweizer Electronic and BII Railway 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 Schweizer Electronic and BII Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schweizer Electronic AG and BII Railway Transportation, you can compare the effects of market volatilities on Schweizer Electronic and BII Railway 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 Schweizer Electronic with a short position of BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schweizer Electronic and BII Railway.
Diversification Opportunities for Schweizer Electronic and BII Railway
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Schweizer and BII is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Schweizer Electronic AG and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor and Schweizer Electronic 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 Schweizer Electronic AG are associated (or correlated) with BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Schweizer Electronic i.e., Schweizer Electronic and BII Railway go up and down completely randomly.
Pair Corralation between Schweizer Electronic and BII Railway
Assuming the 90 days horizon Schweizer Electronic AG is expected to under-perform the BII Railway. In addition to that, Schweizer Electronic is 2.94 times more volatile than BII Railway Transportation. It trades about -0.14 of its total potential returns per unit of risk. BII Railway Transportation is currently generating about -0.04 per unit of volatility. If you would invest 2.65 in BII Railway Transportation on September 13, 2024 and sell it today you would lose (0.05) from holding BII Railway Transportation or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Schweizer Electronic AG vs. BII Railway Transportation
Performance |
| Timeline |
| Schweizer Electronic |
| BII Railway Transpor |
Schweizer Electronic and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schweizer Electronic and BII Railway
The main advantage of trading using opposite Schweizer Electronic and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schweizer Electronic position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| Schweizer Electronic vs. Benchmark Electronics | Schweizer Electronic vs. Superior Plus Corp | Schweizer Electronic vs. SIVERS SEMICONDUCTORS AB | Schweizer Electronic vs. Norsk Hydro ASA |
| BII Railway vs. Cognizant Technology Solutions | BII Railway vs. Superior Plus Corp | BII Railway vs. SIVERS SEMICONDUCTORS AB | BII Railway vs. Norsk Hydro ASA |
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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