Correlation Between Swiss Leader and Straumann Holding
Can any of the company-specific risk be diversified away by investing in both Swiss Leader and Straumann 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 Straumann 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 Straumann Holding AG, you can compare the effects of market volatilities on Swiss Leader and Straumann 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 Straumann Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Leader and Straumann Holding.
Diversification Opportunities for Swiss Leader and Straumann Holding
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Swiss and Straumann is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price and Straumann Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Straumann Holding 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 Straumann Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Straumann Holding has no effect on the direction of Swiss Leader i.e., Swiss Leader and Straumann Holding go up and down completely randomly.
Pair Corralation between Swiss Leader and Straumann Holding
Assuming the 90 days trading horizon Swiss Leader is expected to generate 1.47 times less return on investment than Straumann Holding. But when comparing it to its historical volatility, Swiss Leader Price is 2.16 times less risky than Straumann Holding. It trades about 0.03 of its potential returns per unit of risk. Straumann Holding AG is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11,400 in Straumann Holding AG on September 1, 2024 and sell it today you would earn a total of 65.00 from holding Straumann Holding AG or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swiss Leader Price vs. Straumann Holding AG
Performance |
| Timeline |
Swiss Leader and Straumann Holding Volatility Contrast
Predicted Return Density |
| Returns |
Swiss Leader Price
Pair trading matchups for Swiss Leader
Straumann Holding AG
Pair trading matchups for Straumann Holding
Pair Trading with Swiss Leader and Straumann Holding
The main advantage of trading using opposite Swiss Leader and Straumann Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Leader position performs unexpectedly, Straumann 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 Straumann Holding will offset losses from the drop in Straumann Holding's long position.| Swiss Leader vs. Graubuendner Kantonalbank | Swiss Leader vs. Thurgauer Kantonalbank | Swiss Leader vs. mobilezone ag | Swiss Leader vs. Zurich Insurance Group |
| Straumann Holding vs. Sonova H Ag | Straumann Holding vs. Sika AG | Straumann Holding vs. Lonza Group AG | Straumann Holding vs. Givaudan SA |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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