Correlation Between CSIF III and Baloise Swiss

Can any of the company-specific risk be diversified away by investing in both CSIF III and Baloise Swiss 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 CSIF III and Baloise Swiss into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CSIF III Eq and Baloise Swiss Property, you can compare the effects of market volatilities on CSIF III and Baloise Swiss 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 CSIF III with a short position of Baloise Swiss. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSIF III and Baloise Swiss.

Diversification Opportunities for CSIF III and Baloise Swiss

0.62

Correlation Coefficient

CSIF III  Baloise Swiss

Poor diversification

The 3 months correlation between CSIF and Baloise is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CSIF III Eq and Baloise Swiss Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baloise Swiss Property and CSIF III 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 CSIF III Eq are associated (or correlated) with Baloise Swiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baloise Swiss Property has no effect on the direction of CSIF III i.e., CSIF III and Baloise Swiss go up and down completely randomly.

Pair Corralation between CSIF III and Baloise Swiss

Assuming the 90 days trading horizon CSIF III is expected to generate 1.69 times less return on investment than Baloise Swiss. In addition to that, CSIF III is 1.16 times more volatile than Baloise Swiss Property. It trades about 0.05 of its total potential returns per unit of risk. Baloise Swiss Property is currently generating about 0.11 per unit of volatility. If you would invest  11,600  in Baloise Swiss Property on September 27, 2024 and sell it today you would earn a total of  1,100  from holding Baloise Swiss Property or generate 9.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CSIF III Eq  vs.  Baloise Swiss Property

CSIF III Eq

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSIF III Eq are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, CSIF III is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Baloise Swiss Property

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baloise Swiss Property are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively weak basic indicators, Baloise Swiss may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CSIF III and Baloise Swiss

The main advantage of trading using opposite CSIF III and Baloise Swiss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSIF III position performs unexpectedly, Baloise Swiss 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 Baloise Swiss will offset losses from the drop in Baloise Swiss' long position.

The idea behind CSIF III Eq and Baloise Swiss Property pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.