Correlation Between BCV Swiss and Pictet Ch

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

By analyzing existing cross correlation between BCV Swiss Equity and Pictet Ch Precious, you can compare the effects of market volatilities on BCV Swiss and Pictet Ch 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 BCV Swiss with a short position of Pictet Ch. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCV Swiss and Pictet Ch.

Diversification Opportunities for BCV Swiss and Pictet Ch

0.75

Correlation Coefficient

BCV Swiss  Pictet Ch

Poor diversification

The 3 months correlation between BCV and Pictet is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BCV Swiss Equity and Pictet Ch Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pictet Ch Precious and BCV Swiss 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 BCV Swiss Equity are associated (or correlated) with Pictet Ch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pictet Ch Precious has no effect on the direction of BCV Swiss i.e., BCV Swiss and Pictet Ch go up and down completely randomly.

Pair Corralation between BCV Swiss and Pictet Ch

Assuming the 90 days trading horizon BCV Swiss Equity is expected to generate 0.89 times more return on investment than Pictet Ch. However, BCV Swiss Equity is 1.12 times less risky than Pictet Ch. It trades about 0.16 of its potential returns per unit of risk. Pictet Ch Precious is currently generating about 0.05 per unit of risk. If you would invest  10,854  in BCV Swiss Equity on October 17, 2024 and sell it today you would earn a total of  166.00  from holding BCV Swiss Equity or generate 1.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.75%
Values	Daily Returns

BCV Swiss Equity  vs.  Pictet Ch Precious

BCV Swiss Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCV Swiss Equity has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong forward indicators, BCV Swiss is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pictet Ch Precious

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pictet Ch Precious has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Pictet Ch is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BCV Swiss and Pictet Ch

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

The idea behind BCV Swiss Equity and Pictet Ch Precious 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.