Correlation Between ALERION CLEANPOWER and Swiss Re

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

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

Diversification Opportunities for ALERION CLEANPOWER and Swiss Re

0.7

Correlation Coefficient

ALERION CLEANPOWER  Swiss Re

Poor diversification

The 3 months correlation between ALERION and Swiss is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER and Swiss Re AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Re AG and ALERION CLEANPOWER 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 ALERION CLEANPOWER are associated (or correlated) with Swiss Re. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Re AG has no effect on the direction of ALERION CLEANPOWER i.e., ALERION CLEANPOWER and Swiss Re go up and down completely randomly.

Pair Corralation between ALERION CLEANPOWER and Swiss Re

Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to under-perform the Swiss Re. But the stock apears to be less risky and, when comparing its historical volatility, ALERION CLEANPOWER is 1.07 times less risky than Swiss Re. The stock trades about -0.24 of its potential returns per unit of risk. The Swiss Re AG is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,500  in Swiss Re AG on October 10, 2024 and sell it today you would lose (40.00) from holding Swiss Re AG or give up 1.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

ALERION CLEANPOWER  vs.  Swiss Re AG

ALERION CLEANPOWER

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ALERION CLEANPOWER are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ALERION CLEANPOWER may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Swiss Re AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Re AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Swiss Re unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALERION CLEANPOWER and Swiss Re

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

The idea behind ALERION CLEANPOWER and Swiss Re 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.