Correlation Between Helvetia Holding and VZ Holding

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

Diversification Opportunities for Helvetia Holding and VZ Holding

0.29

Correlation Coefficient

Helvetia Holding  VZ Holding

Modest diversification

The 3 months correlation between Helvetia and VZN is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Helvetia Holding AG and VZ Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VZ Holding AG 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 VZ Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VZ Holding AG has no effect on the direction of Helvetia Holding i.e., Helvetia Holding and VZ Holding go up and down completely randomly.

Pair Corralation between Helvetia Holding and VZ Holding

Assuming the 90 days trading horizon Helvetia Holding is expected to generate 1.8 times less return on investment than VZ Holding. But when comparing it to its historical volatility, Helvetia Holding AG is 1.11 times less risky than VZ Holding. It trades about 0.08 of its potential returns per unit of risk. VZ Holding AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,067  in VZ Holding AG on October 21, 2024 and sell it today you would earn a total of  8,333  from holding VZ Holding AG or generate 117.91% 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.  VZ Holding AG

Helvetia Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Helvetia Holding AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Helvetia Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

VZ Holding AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VZ Holding AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, VZ Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Helvetia Holding and VZ Holding

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

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