Correlation Between SWISS WATER and Transport International

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

Diversification Opportunities for SWISS WATER and Transport International

0.11

Correlation Coefficient

SWISS WATER  Transport International

Average diversification

The 3 months correlation between SWISS and Transport is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and Transport International Holdin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport International 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 Transport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport International has no effect on the direction of SWISS WATER i.e., SWISS WATER and Transport International go up and down completely randomly.

Pair Corralation between SWISS WATER and Transport International

Assuming the 90 days horizon SWISS WATER is expected to generate 4.55 times less return on investment than Transport International. But when comparing it to its historical volatility, SWISS WATER DECAFFCOFFEE is 1.95 times less risky than Transport International. It trades about 0.03 of its potential returns per unit of risk. Transport International Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Transport International Holdings on October 25, 2024 and sell it today you would earn a total of  64.00  from holding Transport International Holdings or generate 213.33% return on investment over 90 days.

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

SWISS WATER DECAFFCOFFEE  vs.  Transport International Holdin

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.

Transport International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SWISS WATER and Transport International

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

The idea behind SWISS WATER DECAFFCOFFEE and Transport International Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.