Correlation Between Baloise Holding and Pictet Ch

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

Diversification Opportunities for Baloise Holding and Pictet Ch

0.28

Correlation Coefficient

Baloise Holding  Pictet Ch

Modest diversification

The 3 months correlation between Baloise and Pictet is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG and Pictet Ch Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pictet Ch Precious 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 Pictet Ch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pictet Ch Precious has no effect on the direction of Baloise Holding i.e., Baloise Holding and Pictet Ch go up and down completely randomly.

Pair Corralation between Baloise Holding and Pictet Ch

Assuming the 90 days trading horizon Baloise Holding is expected to generate 1.56 times less return on investment than Pictet Ch. In addition to that, Baloise Holding is 1.23 times more volatile than Pictet Ch Precious. It trades about 0.04 of its total potential returns per unit of risk. Pictet Ch Precious is currently generating about 0.08 per unit of volatility. If you would invest  17,358  in Pictet Ch Precious on September 27, 2024 and sell it today you would earn a total of  6,880  from holding Pictet Ch Precious or generate 39.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.59%
Values	Daily Returns

Baloise Holding AG  vs.  Pictet Ch Precious

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.

Pictet Ch Precious

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pictet Ch Precious has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Pictet Ch is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Baloise Holding and Pictet Ch

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

The idea behind Baloise Holding AG and Pictet Ch Precious 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.