Correlation Between SWISS WATER and Onxeo SA

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

Diversification Opportunities for SWISS WATER and Onxeo SA

-0.23

Correlation Coefficient

SWISS WATER  Onxeo SA

Very good diversification

The 3 months correlation between SWISS and Onxeo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and Onxeo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onxeo SA 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 Onxeo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onxeo SA has no effect on the direction of SWISS WATER i.e., SWISS WATER and Onxeo SA go up and down completely randomly.

Pair Corralation between SWISS WATER and Onxeo SA

Assuming the 90 days horizon SWISS WATER is expected to generate 2.54 times less return on investment than Onxeo SA. But when comparing it to its historical volatility, SWISS WATER DECAFFCOFFEE is 3.91 times less risky than Onxeo SA. It trades about 0.08 of its potential returns per unit of risk. Onxeo SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6.86  in Onxeo SA on September 12, 2024 and sell it today you would earn a total of  0.19  from holding Onxeo SA or generate 2.77% 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.  Onxeo SA

SWISS WATER DECAFFCOFFEE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SWISS WATER DECAFFCOFFEE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SWISS WATER may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Onxeo SA

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Onxeo SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Onxeo SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SWISS WATER and Onxeo SA

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

The idea behind SWISS WATER DECAFFCOFFEE and Onxeo SA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.