Correlation Between Baloise Holding and LO Funds

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

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

Diversification Opportunities for Baloise Holding and LO Funds

0.84

Correlation Coefficient

Baloise Holding  LO Funds

Very poor diversification

The 3 months correlation between Baloise and 0P00001R8Q is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG and LO Funds Swiss in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LO Funds Swiss and Baloise 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 Baloise Holding AG are associated (or correlated) with LO Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LO Funds Swiss has no effect on the direction of Baloise Holding i.e., Baloise Holding and LO Funds go up and down completely randomly.

Pair Corralation between Baloise Holding and LO Funds

Assuming the 90 days trading horizon Baloise Holding AG is expected to under-perform the LO Funds. But the stock apears to be less risky and, when comparing its historical volatility, Baloise Holding AG is 1.18 times less risky than LO Funds. The stock trades about -0.19 of its potential returns per unit of risk. The LO Funds Swiss is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  20,736  in LO Funds Swiss on September 28, 2024 and sell it today you would lose (372.00) from holding LO Funds Swiss or give up 1.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Baloise Holding AG  vs.  LO Funds Swiss

Baloise Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baloise Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Baloise Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

LO Funds Swiss

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LO Funds Swiss has generated negative risk-adjusted returns adding no value to fund investors. Despite latest abnormal performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Baloise Holding and LO Funds

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

The idea behind Baloise Holding AG and LO Funds Swiss 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..