Correlation Between SWISS WATER and ACCSYS TECHPLC

Can any of the company-specific risk be diversified away by investing in both SWISS WATER and ACCSYS TECHPLC 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 WATER and ACCSYS TECHPLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and ACCSYS TECHPLC EO, you can compare the effects of market volatilities on SWISS WATER and ACCSYS TECHPLC 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 WATER with a short position of ACCSYS TECHPLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and ACCSYS TECHPLC.

Diversification Opportunities for SWISS WATER and ACCSYS TECHPLC

0.77

Correlation Coefficient

SWISS WATER  ACCSYS TECHPLC

Poor diversification

The 3 months correlation between SWISS and ACCSYS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and ACCSYS TECHPLC EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACCSYS TECHPLC EO and SWISS WATER 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 WATER DECAFFCOFFEE are associated (or correlated) with ACCSYS TECHPLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACCSYS TECHPLC EO has no effect on the direction of SWISS WATER i.e., SWISS WATER and ACCSYS TECHPLC go up and down completely randomly.

Pair Corralation between SWISS WATER and ACCSYS TECHPLC

Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to under-perform the ACCSYS TECHPLC. In addition to that, SWISS WATER is 1.11 times more volatile than ACCSYS TECHPLC EO. It trades about -0.14 of its total potential returns per unit of risk. ACCSYS TECHPLC EO is currently generating about -0.01 per unit of volatility. If you would invest  54.00  in ACCSYS TECHPLC EO on December 4, 2024 and sell it today you would lose (2.00) from holding ACCSYS TECHPLC EO or give up 3.7% of portfolio value over 90 days.

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

SWISS WATER DECAFFCOFFEE  vs.  ACCSYS TECHPLC EO

SWISS WATER DECAFFCOFFEE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SWISS WATER DECAFFCOFFEE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ACCSYS TECHPLC EO

Risk-Adjusted Performance

Very Weak

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

Pair Trading with SWISS WATER and ACCSYS TECHPLC

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

The idea behind SWISS WATER DECAFFCOFFEE and ACCSYS TECHPLC EO 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.