Correlation Between Swisscom and Sika AG
Can any of the company-specific risk be diversified away by investing in both Swisscom and Sika AG 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 Sika AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swisscom AG and Sika AG, you can compare the effects of market volatilities on Swisscom and Sika AG 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 Sika AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swisscom and Sika AG.
Diversification Opportunities for Swisscom and Sika AG
Weak diversification
The 3 months correlation between Swisscom and Sika is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Swisscom AG and Sika AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sika 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 Sika AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sika AG has no effect on the direction of Swisscom i.e., Swisscom and Sika AG go up and down completely randomly.
Pair Corralation between Swisscom and Sika AG
Assuming the 90 days trading horizon Swisscom AG is expected to under-perform the Sika AG. But the stock apears to be less risky and, when comparing its historical volatility, Swisscom AG is 1.77 times less risky than Sika AG. The stock trades about -0.01 of its potential returns per unit of risk. The Sika AG is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 25,898 in Sika AG on November 19, 2024 and sell it today you would lose (1,688) from holding Sika AG or give up 6.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swisscom AG vs. Sika AG
Performance |
| Timeline |
| Swisscom AG |
| Sika AG |
Swisscom and Sika AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swisscom and Sika AG
The main advantage of trading using opposite Swisscom and Sika AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swisscom position performs unexpectedly, Sika AG 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 Sika AG will offset losses from the drop in Sika AG's long position.| Swisscom vs. Swiss Life Holding | Swisscom vs. Zurich Insurance Group | Swisscom vs. Swiss Re AG | Swisscom vs. ABB |
| Sika AG vs. Lonza Group AG | Sika AG vs. Givaudan SA | Sika AG vs. Geberit AG | Sika AG vs. Partners Group Holding |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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