Correlation Between Lumen Technologies and SwissCom

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Can any of the company-specific risk be diversified away by investing in both Lumen Technologies 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 Lumen Technologies and SwissCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumen Technologies and SwissCom AG, you can compare the effects of market volatilities on Lumen Technologies 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 Lumen Technologies with a short position of SwissCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumen Technologies and SwissCom.

Diversification Opportunities for Lumen Technologies and SwissCom

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between Lumen and SwissCom is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies and SwissCom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SwissCom AG and Lumen Technologies 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 Lumen Technologies 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 Lumen Technologies i.e., Lumen Technologies and SwissCom go up and down completely randomly.

Pair Corralation between Lumen Technologies and SwissCom

Given the investment horizon of 90 days Lumen Technologies is expected to generate 11.04 times more return on investment than SwissCom. However, Lumen Technologies is 11.04 times more volatile than SwissCom AG. It trades about 0.11 of its potential returns per unit of risk. SwissCom AG is currently generating about -0.05 per unit of risk. If you would invest  267.00  in Lumen Technologies on September 28, 2024 and sell it today you would earn a total of  300.00  from holding Lumen Technologies or generate 112.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lumen Technologies  vs.  SwissCom AG

 Performance 
       Timeline  
Lumen Technologies 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Lumen Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
SwissCom AG 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Lumen Technologies and SwissCom Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lumen Technologies and SwissCom

The main advantage of trading using opposite Lumen Technologies and SwissCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumen Technologies 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 Lumen Technologies 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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