Correlation Between SwissCom and Telus Corp

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

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

Diversification Opportunities for SwissCom and Telus Corp

0.8

Correlation Coefficient

SwissCom  Telus Corp

Very poor diversification

The 3 months correlation between SwissCom and Telus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SwissCom AG and Telus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telus Corp and SwissCom 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 SwissCom AG are associated (or correlated) with Telus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telus Corp has no effect on the direction of SwissCom i.e., SwissCom and Telus Corp go up and down completely randomly.

Pair Corralation between SwissCom and Telus Corp

Assuming the 90 days horizon SwissCom AG is expected to generate 0.62 times more return on investment than Telus Corp. However, SwissCom AG is 1.61 times less risky than Telus Corp. It trades about -0.23 of its potential returns per unit of risk. Telus Corp is currently generating about -0.44 per unit of risk. If you would invest  5,780  in SwissCom AG on October 10, 2024 and sell it today you would lose (191.00) from holding SwissCom AG or give up 3.3% of portfolio value over 90 days.

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

SwissCom AG  vs.  Telus Corp

SwissCom AG

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Telus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SwissCom and Telus Corp

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

The idea behind SwissCom AG and Telus Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.