Correlation Between Schwager and AFP Planvital

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

By analyzing existing cross correlation between Schwager and AFP Planvital SA, you can compare the effects of market volatilities on Schwager and AFP Planvital 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 Schwager with a short position of AFP Planvital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwager and AFP Planvital.

Diversification Opportunities for Schwager and AFP Planvital

0.88

Correlation Coefficient

Schwager  AFP Planvital

Very poor diversification

The 3 months correlation between Schwager and AFP is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Schwager and AFP Planvital SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFP Planvital SA and Schwager 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 Schwager are associated (or correlated) with AFP Planvital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFP Planvital SA has no effect on the direction of Schwager i.e., Schwager and AFP Planvital go up and down completely randomly.

Pair Corralation between Schwager and AFP Planvital

Assuming the 90 days trading horizon Schwager is expected to generate 3.21 times more return on investment than AFP Planvital. However, Schwager is 3.21 times more volatile than AFP Planvital SA. It trades about 0.18 of its potential returns per unit of risk. AFP Planvital SA is currently generating about 0.45 per unit of risk. If you would invest  106.00  in Schwager on December 30, 2024 and sell it today you would earn a total of  44.00  from holding Schwager or generate 41.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.88%
Values	Daily Returns

Schwager  vs.  AFP Planvital SA

Schwager

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Schwager are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Schwager exhibited solid returns over the last few months and may actually be approaching a breakup point.

AFP Planvital SA

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in AFP Planvital SA are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward indicators, AFP Planvital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schwager and AFP Planvital

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

The idea behind Schwager and AFP Planvital SA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.