Correlation Between SwissCom and Koninklijke KPN
Can any of the company-specific risk be diversified away by investing in both SwissCom and Koninklijke KPN 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 Koninklijke KPN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SwissCom AG and Koninklijke KPN NV, you can compare the effects of market volatilities on SwissCom and Koninklijke KPN 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 Koninklijke KPN. Check out your portfolio center. Please also check ongoing floating volatility patterns of SwissCom and Koninklijke KPN.
Diversification Opportunities for SwissCom and Koninklijke KPN
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SwissCom and Koninklijke is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding SwissCom AG and Koninklijke KPN NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke KPN NV 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 Koninklijke KPN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke KPN NV has no effect on the direction of SwissCom i.e., SwissCom and Koninklijke KPN go up and down completely randomly.
Pair Corralation between SwissCom and Koninklijke KPN
Assuming the 90 days horizon SwissCom AG is expected to generate 0.55 times more return on investment than Koninklijke KPN. However, SwissCom AG is 1.8 times less risky than Koninklijke KPN. It trades about 0.1 of its potential returns per unit of risk. Koninklijke KPN NV is currently generating about -0.01 per unit of risk. If you would invest 5,573 in SwissCom AG on November 3, 2024 and sell it today you would earn a total of 104.00 from holding SwissCom AG or generate 1.87% 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. Koninklijke KPN NV
Performance |
| Timeline |
| SwissCom AG |
| Koninklijke KPN NV |
SwissCom and Koninklijke KPN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SwissCom and Koninklijke KPN
The main advantage of trading using opposite SwissCom and Koninklijke KPN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SwissCom position performs unexpectedly, Koninklijke KPN 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 Koninklijke KPN will offset losses from the drop in Koninklijke KPN's long position.| SwissCom vs. Telecom Argentina SA | SwissCom vs. Rogers Communications | SwissCom vs. Magyar Telekom Plc | SwissCom vs. Hellenic Telecommunications Org |
| Koninklijke KPN vs. Turk Telekomunikasyon AS | Koninklijke KPN vs. Orange SA | Koninklijke KPN vs. Nippon Telegraph Telephone | Koninklijke KPN vs. SwissCom AG |
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 Stocks Directory module to find actively traded stocks across global markets.
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