Correlation Between COMPUTER MODELLING and Swatch Group

Can any of the company-specific risk be diversified away by investing in both COMPUTER MODELLING and Swatch Group 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 COMPUTER MODELLING and Swatch Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COMPUTER MODELLING and The Swatch Group, you can compare the effects of market volatilities on COMPUTER MODELLING and Swatch Group 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 COMPUTER MODELLING with a short position of Swatch Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMPUTER MODELLING and Swatch Group.

Diversification Opportunities for COMPUTER MODELLING and Swatch Group

-0.21

Correlation Coefficient

COMPUTER MODELLING  Swatch Group

Very good diversification

The 3 months correlation between COMPUTER and Swatch is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding COMPUTER MODELLING and The Swatch Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group and COMPUTER MODELLING 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 COMPUTER MODELLING are associated (or correlated) with Swatch Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group has no effect on the direction of COMPUTER MODELLING i.e., COMPUTER MODELLING and Swatch Group go up and down completely randomly.

Pair Corralation between COMPUTER MODELLING and Swatch Group

Assuming the 90 days trading horizon COMPUTER MODELLING is expected to generate 0.17 times more return on investment than Swatch Group. However, COMPUTER MODELLING is 5.76 times less risky than Swatch Group. It trades about 0.12 of its potential returns per unit of risk. The Swatch Group is currently generating about -0.2 per unit of risk. If you would invest  377.00  in COMPUTER MODELLING on December 23, 2024 and sell it today you would earn a total of  3.00  from holding COMPUTER MODELLING or generate 0.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

COMPUTER MODELLING  vs.  The Swatch Group

COMPUTER MODELLING

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COMPUTER MODELLING are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking indicators, COMPUTER MODELLING is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Swatch Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Swatch Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Swatch Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with COMPUTER MODELLING and Swatch Group

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

The idea behind COMPUTER MODELLING and The Swatch Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.