Correlation Between Helvetia Holding and EFG International

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

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

Diversification Opportunities for Helvetia Holding and EFG International

0.42

Correlation Coefficient

Helvetia Holding  EFG International

Very weak diversification

The 3 months correlation between Helvetia and EFG is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Helvetia Holding AG and EFG International AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFG International and Helvetia 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 Helvetia Holding AG are associated (or correlated) with EFG International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFG International has no effect on the direction of Helvetia Holding i.e., Helvetia Holding and EFG International go up and down completely randomly.

Pair Corralation between Helvetia Holding and EFG International

Assuming the 90 days trading horizon Helvetia Holding AG is expected to generate 0.66 times more return on investment than EFG International. However, Helvetia Holding AG is 1.53 times less risky than EFG International. It trades about 0.62 of its potential returns per unit of risk. EFG International AG is currently generating about 0.3 per unit of risk. If you would invest  14,790  in Helvetia Holding AG on October 22, 2024 and sell it today you would earn a total of  1,230  from holding Helvetia Holding AG or generate 8.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Helvetia Holding AG  vs.  EFG International AG

Helvetia Holding

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Helvetia Holding AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Helvetia Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

EFG International

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Helvetia Holding and EFG International

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

The idea behind Helvetia Holding AG and EFG International 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.