Correlation Between Swiss Life and Adecco Group

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

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

Diversification Opportunities for Swiss Life and Adecco Group

-0.2

Correlation Coefficient

Swiss Life  Adecco Group

Good diversification

The 3 months correlation between Swiss and Adecco is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and Adecco Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group AG and Swiss Life 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 Swiss Life Holding are associated (or correlated) with Adecco Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecco Group AG has no effect on the direction of Swiss Life i.e., Swiss Life and Adecco Group go up and down completely randomly.

Pair Corralation between Swiss Life and Adecco Group

Assuming the 90 days trading horizon Swiss Life Holding is expected to generate 0.58 times more return on investment than Adecco Group. However, Swiss Life Holding is 1.73 times less risky than Adecco Group. It trades about -0.01 of its potential returns per unit of risk. Adecco Group AG is currently generating about -0.1 per unit of risk. If you would invest  69,760  in Swiss Life Holding on September 12, 2024 and sell it today you would lose (580.00) from holding Swiss Life Holding or give up 0.83% of portfolio value over 90 days.

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

Swiss Life Holding  vs.  Adecco Group AG

Swiss Life Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swiss Life Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Swiss Life is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Adecco Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecco Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Swiss Life and Adecco Group

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

The idea behind Swiss Life Holding and Adecco Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.