Correlation Between Allreal Holding and PSP Swiss

Can any of the company-specific risk be diversified away by investing in both Allreal Holding and PSP Swiss 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 Allreal Holding and PSP Swiss into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allreal Holding and PSP Swiss Property, you can compare the effects of market volatilities on Allreal Holding and PSP Swiss 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 Allreal Holding with a short position of PSP Swiss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allreal Holding and PSP Swiss.

Diversification Opportunities for Allreal Holding and PSP Swiss

0.64

Correlation Coefficient

Allreal Holding  PSP Swiss

Poor diversification

The 3 months correlation between Allreal and PSP is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Allreal Holding and PSP Swiss Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSP Swiss Property and Allreal Holding 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 Allreal Holding are associated (or correlated) with PSP Swiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSP Swiss Property has no effect on the direction of Allreal Holding i.e., Allreal Holding and PSP Swiss go up and down completely randomly.

Pair Corralation between Allreal Holding and PSP Swiss

Assuming the 90 days trading horizon Allreal Holding is expected to generate 0.91 times more return on investment than PSP Swiss. However, Allreal Holding is 1.1 times less risky than PSP Swiss. It trades about 0.22 of its potential returns per unit of risk. PSP Swiss Property is currently generating about 0.14 per unit of risk. If you would invest  16,500  in Allreal Holding on December 27, 2024 and sell it today you would earn a total of  1,740  from holding Allreal Holding or generate 10.55% return on investment over 90 days.

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

Allreal Holding  vs.  PSP Swiss Property

Allreal Holding

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allreal Holding are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Allreal Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PSP Swiss Property

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PSP Swiss Property are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, PSP Swiss may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Allreal Holding and PSP Swiss

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

The idea behind Allreal Holding and PSP Swiss Property 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.