Correlation Between Swiss Leader and Rieter Holding
Can any of the company-specific risk be diversified away by investing in both Swiss Leader and Rieter 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 Swiss Leader and Rieter Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Leader Price and Rieter Holding AG, you can compare the effects of market volatilities on Swiss Leader and Rieter 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 Swiss Leader with a short position of Rieter Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Leader and Rieter Holding.
Diversification Opportunities for Swiss Leader and Rieter Holding
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Swiss and Rieter is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price and Rieter Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rieter Holding AG and Swiss Leader 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 Leader Price are associated (or correlated) with Rieter Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rieter Holding AG has no effect on the direction of Swiss Leader i.e., Swiss Leader and Rieter Holding go up and down completely randomly.
Pair Corralation between Swiss Leader and Rieter Holding
Assuming the 90 days trading horizon Swiss Leader Price is expected to generate 0.54 times more return on investment than Rieter Holding. However, Swiss Leader Price is 1.84 times less risky than Rieter Holding. It trades about -0.2 of its potential returns per unit of risk. Rieter Holding AG is currently generating about -0.45 per unit of risk. If you would invest 199,681 in Swiss Leader Price on August 29, 2024 and sell it today you would lose (7,703) from holding Swiss Leader Price or give up 3.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swiss Leader Price vs. Rieter Holding AG
Performance |
| Timeline |
Swiss Leader and Rieter Holding Volatility Contrast
Predicted Return Density |
| Returns |
Swiss Leader Price
Pair trading matchups for Swiss Leader
Rieter Holding AG
Pair trading matchups for Rieter Holding
Pair Trading with Swiss Leader and Rieter Holding
The main advantage of trading using opposite Swiss Leader and Rieter Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Leader position performs unexpectedly, Rieter 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 Rieter Holding will offset losses from the drop in Rieter Holding's long position.| Swiss Leader vs. Logitech International SA | Swiss Leader vs. VP Bank AG | Swiss Leader vs. Basellandschaftliche Kantonalbank | Swiss Leader vs. Swiss Steel Holding |
| Rieter Holding vs. Autoneum Holding AG | Rieter Holding vs. Sulzer AG | Rieter Holding vs. OC Oerlikon Corp | Rieter Holding vs. Bucher Industries 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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