Correlation Between Gulf Island and SwissCom

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

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

Diversification Opportunities for Gulf Island and SwissCom

-0.94

Correlation Coefficient

Gulf Island  SwissCom

Pay attention - limited upside

The 3 months correlation between Gulf and SwissCom is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Island Fabrication and SwissCom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SwissCom AG and Gulf Island 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 Gulf Island Fabrication are associated (or correlated) with SwissCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SwissCom AG has no effect on the direction of Gulf Island i.e., Gulf Island and SwissCom go up and down completely randomly.

Pair Corralation between Gulf Island and SwissCom

Given the investment horizon of 90 days Gulf Island Fabrication is expected to generate 2.8 times more return on investment than SwissCom. However, Gulf Island is 2.8 times more volatile than SwissCom AG. It trades about 0.14 of its potential returns per unit of risk. SwissCom AG is currently generating about -0.19 per unit of risk. If you would invest  540.00  in Gulf Island Fabrication on September 27, 2024 and sell it today you would earn a total of  156.00  from holding Gulf Island Fabrication or generate 28.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Gulf Island Fabrication  vs.  SwissCom AG

Gulf Island Fabrication

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Island Fabrication are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Gulf Island demonstrated solid returns over the last few months and may actually be approaching a breakup point.

SwissCom AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SwissCom AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gulf Island and SwissCom

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

The idea behind Gulf Island Fabrication and SwissCom 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.