Correlation Between Schweizer Electronic and Sun Communities

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

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

Diversification Opportunities for Schweizer Electronic and Sun Communities

0.29

Correlation Coefficient

Schweizer Electronic  Sun Communities

Modest diversification

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

Pair Corralation between Schweizer Electronic and Sun Communities

Assuming the 90 days horizon Schweizer Electronic AG is expected to generate 4.04 times more return on investment than Sun Communities. However, Schweizer Electronic is 4.04 times more volatile than Sun Communities. It trades about 0.04 of its potential returns per unit of risk. Sun Communities is currently generating about -0.03 per unit of risk. If you would invest  256.00  in Schweizer Electronic AG on September 27, 2024 and sell it today you would earn a total of  4.00  from holding Schweizer Electronic AG or generate 1.56% return on investment over 90 days.

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

Schweizer Electronic AG  vs.  Sun Communities

Schweizer Electronic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sun Communities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Communities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sun Communities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Schweizer Electronic and Sun Communities

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

The idea behind Schweizer Electronic AG and Sun Communities 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.