Correlation Between Swisscom and Adecco Group
Can any of the company-specific risk be diversified away by investing in both Swisscom and Adecco Group 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 Swisscom and Adecco Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swisscom AG and Adecco Group AG, you can compare the effects of market volatilities on Swisscom and Adecco Group 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 Swisscom with a short position of Adecco Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swisscom and Adecco Group.
Diversification Opportunities for Swisscom and Adecco Group
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Swisscom and Adecco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Swisscom AG and Adecco Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group AG and Swisscom 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 Swisscom AG are associated (or correlated) with Adecco Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecco Group AG has no effect on the direction of Swisscom i.e., Swisscom and Adecco Group go up and down completely randomly.
Pair Corralation between Swisscom and Adecco Group
Assuming the 90 days trading horizon Swisscom is expected to generate 2.55 times less return on investment than Adecco Group. But when comparing it to its historical volatility, Swisscom AG is 4.53 times less risky than Adecco Group. It trades about 0.2 of its potential returns per unit of risk. Adecco Group AG is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,448 in Adecco Group AG on January 1, 2025 and sell it today you would earn a total of 194.00 from holding Adecco Group AG or generate 7.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swisscom AG vs. Adecco Group AG
Performance |
| Timeline |
| Swisscom AG |
| Adecco Group AG |
Swisscom and Adecco Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swisscom and Adecco Group
The main advantage of trading using opposite Swisscom and Adecco Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swisscom position performs unexpectedly, Adecco Group 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 Adecco Group will offset losses from the drop in Adecco Group's long position.| Swisscom vs. Swiss Life Holding | ||
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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