Correlation Between Swisscom and Baloise Holding
Can any of the company-specific risk be diversified away by investing in both Swisscom and Baloise Holding 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 Baloise Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swisscom AG and Baloise Holding AG, you can compare the effects of market volatilities on Swisscom and Baloise Holding 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 Baloise Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swisscom and Baloise Holding.
Diversification Opportunities for Swisscom and Baloise Holding
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Swisscom and Baloise is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Swisscom AG and Baloise Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baloise Holding 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 Baloise Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baloise Holding AG has no effect on the direction of Swisscom i.e., Swisscom and Baloise Holding go up and down completely randomly.
Pair Corralation between Swisscom and Baloise Holding
Assuming the 90 days trading horizon Swisscom AG is expected to generate 0.98 times more return on investment than Baloise Holding. However, Swisscom AG is 1.02 times less risky than Baloise Holding. It trades about 0.14 of its potential returns per unit of risk. Baloise Holding AG is currently generating about -0.03 per unit of risk. If you would invest 50,400 in Swisscom AG on November 5, 2024 and sell it today you would earn a total of 950.00 from holding Swisscom AG or generate 1.88% 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. Baloise Holding AG
Performance |
| Timeline |
| Swisscom AG |
| Baloise Holding AG |
Swisscom and Baloise Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swisscom and Baloise Holding
The main advantage of trading using opposite Swisscom and Baloise Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swisscom position performs unexpectedly, Baloise Holding 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 Baloise Holding will offset losses from the drop in Baloise Holding's long position.| Swisscom vs. Swiss Life Holding | Swisscom vs. Zurich Insurance Group | Swisscom vs. Swiss Re AG | Swisscom vs. ABB |
| Baloise Holding vs. Swiss Life Holding | Baloise Holding vs. Helvetia Holding AG | Baloise Holding vs. Swisscom AG | Baloise Holding vs. Zurich Insurance Group |
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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