Correlation Between EFG International and Helvetia Holding

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

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

Diversification Opportunities for EFG International and Helvetia Holding

0.65

Correlation Coefficient

EFG International  Helvetia Holding

Poor diversification

The 3 months correlation between EFG and Helvetia is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding EFG International AG and Helvetia Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helvetia Holding and EFG International 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 EFG International AG are associated (or correlated) with Helvetia Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helvetia Holding has no effect on the direction of EFG International i.e., EFG International and Helvetia Holding go up and down completely randomly.

Pair Corralation between EFG International and Helvetia Holding

Assuming the 90 days trading horizon EFG International is expected to generate 2.15 times less return on investment than Helvetia Holding. In addition to that, EFG International is 1.52 times more volatile than Helvetia Holding AG. It trades about 0.13 of its total potential returns per unit of risk. Helvetia Holding AG is currently generating about 0.43 per unit of volatility. If you would invest  14,920  in Helvetia Holding AG on December 27, 2024 and sell it today you would earn a total of  3,720  from holding Helvetia Holding AG or generate 24.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

EFG International AG  vs.  Helvetia Holding AG

EFG International

Risk-Adjusted Performance

OK

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

Helvetia Holding

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Helvetia Holding AG are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Helvetia Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EFG International and Helvetia Holding

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

The idea behind EFG International AG and Helvetia Holding AG 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.