Correlation Between Credo Technology and Swiss Life

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

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

Diversification Opportunities for Credo Technology and Swiss Life

-0.83

Correlation Coefficient

Credo Technology  Swiss Life

Pay attention - limited upside

The 3 months correlation between Credo and Swiss is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Credo Technology Group and Swiss Life Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Life Holding and Credo Technology 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 Credo Technology Group are associated (or correlated) with Swiss Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Life Holding has no effect on the direction of Credo Technology i.e., Credo Technology and Swiss Life go up and down completely randomly.

Pair Corralation between Credo Technology and Swiss Life

Given the investment horizon of 90 days Credo Technology Group is expected to generate 5.13 times more return on investment than Swiss Life. However, Credo Technology is 5.13 times more volatile than Swiss Life Holding. It trades about 0.19 of its potential returns per unit of risk. Swiss Life Holding is currently generating about -0.01 per unit of risk. If you would invest  4,628  in Credo Technology Group on October 22, 2024 and sell it today you would earn a total of  3,374  from holding Credo Technology Group or generate 72.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.5%
Values	Daily Returns

Credo Technology Group  vs.  Swiss Life Holding

Credo Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Credo Technology Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Credo Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Swiss Life Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swiss Life Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Swiss Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Credo Technology and Swiss Life

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

The idea behind Credo Technology Group and Swiss Life Holding 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.