Correlation Between Swatch Group and Kering SA
Can any of the company-specific risk be diversified away by investing in both Swatch Group and Kering SA 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 Swatch Group and Kering SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swatch Group AG and Kering SA, you can compare the effects of market volatilities on Swatch Group and Kering SA 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 Swatch Group with a short position of Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swatch Group and Kering SA.
Diversification Opportunities for Swatch Group and Kering SA
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Swatch and Kering is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Swatch Group AG and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA and Swatch Group 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 Swatch Group AG are associated (or correlated) with Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Swatch Group i.e., Swatch Group and Kering SA go up and down completely randomly.
Pair Corralation between Swatch Group and Kering SA
Assuming the 90 days horizon Swatch Group AG is expected to under-perform the Kering SA. But the pink sheet apears to be less risky and, when comparing its historical volatility, Swatch Group AG is 1.24 times less risky than Kering SA. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Kering SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,460 in Kering SA on October 22, 2024 and sell it today you would earn a total of 37.00 from holding Kering SA or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swatch Group AG vs. Kering SA
Performance |
| Timeline |
| Swatch Group AG |
| Kering SA |
Swatch Group and Kering SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swatch Group and Kering SA
The main advantage of trading using opposite Swatch Group and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swatch Group position performs unexpectedly, Kering SA 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 Kering SA will offset losses from the drop in Kering SA's long position.| Swatch Group vs. Chow Tai Fook | Swatch Group vs. Christian Dior SE | Swatch Group vs. Kering SA | Swatch Group vs. Christian Dior SE |
| Kering SA vs. Chow Tai Fook | Kering SA vs. Christian Dior SE | Kering SA vs. Kering SA | Kering SA vs. Christian Dior SE |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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