Correlation Between Swiss Life and Galenica Sante
Can any of the company-specific risk be diversified away by investing in both Swiss Life and Galenica Sante 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 Swiss Life and Galenica Sante into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Life Holding and Galenica Sante AG, you can compare the effects of market volatilities on Swiss Life and Galenica Sante 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 Swiss Life with a short position of Galenica Sante. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Life and Galenica Sante.
Diversification Opportunities for Swiss Life and Galenica Sante
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Swiss and Galenica is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and Galenica Sante AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galenica Sante AG and Swiss Life 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 Swiss Life Holding are associated (or correlated) with Galenica Sante. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galenica Sante AG has no effect on the direction of Swiss Life i.e., Swiss Life and Galenica Sante go up and down completely randomly.
Pair Corralation between Swiss Life and Galenica Sante
Assuming the 90 days trading horizon Swiss Life Holding is expected to generate 1.1 times more return on investment than Galenica Sante. However, Swiss Life is 1.1 times more volatile than Galenica Sante AG. It trades about 0.13 of its potential returns per unit of risk. Galenica Sante AG is currently generating about 0.11 per unit of risk. If you would invest 70,440 in Swiss Life Holding on September 1, 2024 and sell it today you would earn a total of 1,740 from holding Swiss Life Holding or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Swiss Life Holding vs. Galenica Sante AG
Performance |
| Timeline |
| Swiss Life Holding |
| Galenica Sante AG |
Swiss Life and Galenica Sante Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swiss Life and Galenica Sante
The main advantage of trading using opposite Swiss Life and Galenica Sante positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Life position performs unexpectedly, Galenica Sante 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 Galenica Sante will offset losses from the drop in Galenica Sante's long position.| Swiss Life vs. Zurich Insurance Group | Swiss Life vs. Swiss Re AG | Swiss Life vs. Swisscom AG | Swiss Life vs. Lonza Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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