Correlation Between Helvetia Holding and PSP Swiss

Can any of the company-specific risk be diversified away by investing in both Helvetia Holding and PSP Swiss 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 PSP Swiss 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 PSP Swiss Property, you can compare the effects of market volatilities on Helvetia Holding and PSP Swiss 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 PSP Swiss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Helvetia Holding and PSP Swiss.

Diversification Opportunities for Helvetia Holding and PSP Swiss

0.3

Correlation Coefficient

Helvetia Holding  PSP Swiss

Weak diversification

The 3 months correlation between Helvetia and PSP is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Helvetia Holding AG and PSP Swiss Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSP Swiss Property 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 PSP Swiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSP Swiss Property has no effect on the direction of Helvetia Holding i.e., Helvetia Holding and PSP Swiss go up and down completely randomly.

Pair Corralation between Helvetia Holding and PSP Swiss

Assuming the 90 days trading horizon Helvetia Holding AG is expected to generate 1.02 times more return on investment than PSP Swiss. However, Helvetia Holding is 1.02 times more volatile than PSP Swiss Property. It trades about 0.43 of its potential returns per unit of risk. PSP Swiss Property is currently generating about 0.13 per unit of risk. 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Helvetia Holding AG  vs.  PSP Swiss Property

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 weak basic indicators, Helvetia Holding showed solid returns over the last few months and may actually be approaching a breakup point.

PSP Swiss Property

Risk-Adjusted Performance

OK

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

Pair Trading with Helvetia Holding and PSP Swiss

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

The idea behind Helvetia Holding AG and PSP Swiss Property 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.