Correlation Between SWISS WATER and STILLFRONT GRP

Can any of the company-specific risk be diversified away by investing in both SWISS WATER and STILLFRONT GRP 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 STILLFRONT GRP 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 STILLFRONT GRP AB, you can compare the effects of market volatilities on SWISS WATER and STILLFRONT GRP 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 STILLFRONT GRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and STILLFRONT GRP.

Diversification Opportunities for SWISS WATER and STILLFRONT GRP

-0.22

Correlation Coefficient

SWISS WATER  STILLFRONT GRP

Very good diversification

The 3 months correlation between SWISS and STILLFRONT is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and STILLFRONT GRP AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STILLFRONT GRP AB 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 STILLFRONT GRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STILLFRONT GRP AB has no effect on the direction of SWISS WATER i.e., SWISS WATER and STILLFRONT GRP go up and down completely randomly.

Pair Corralation between SWISS WATER and STILLFRONT GRP

Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to under-perform the STILLFRONT GRP. In addition to that, SWISS WATER is 1.01 times more volatile than STILLFRONT GRP AB. It trades about -0.08 of its total potential returns per unit of risk. STILLFRONT GRP AB is currently generating about 0.03 per unit of volatility. If you would invest  60.00  in STILLFRONT GRP AB on October 25, 2024 and sell it today you would earn a total of  2.00  from holding STILLFRONT GRP AB or generate 3.33% return on investment over 90 days.

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

SWISS WATER DECAFFCOFFEE  vs.  STILLFRONT GRP AB

SWISS WATER DECAFFCOFFEE

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

STILLFRONT GRP AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in STILLFRONT GRP AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, STILLFRONT GRP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SWISS WATER and STILLFRONT GRP

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

The idea behind SWISS WATER DECAFFCOFFEE and STILLFRONT GRP AB 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.