Correlation Between Swiss Life and Belimo Holding

Can any of the company-specific risk be diversified away by investing in both Swiss Life and Belimo Holding 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 Belimo Holding 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 Belimo Holding, you can compare the effects of market volatilities on Swiss Life and Belimo Holding 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 Belimo Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Life and Belimo Holding.

Diversification Opportunities for Swiss Life and Belimo Holding

-0.66

Correlation Coefficient

Swiss Life  Belimo Holding

Excellent diversification

The 3 months correlation between Swiss and Belimo is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and Belimo Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belimo Holding 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 Belimo Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belimo Holding has no effect on the direction of Swiss Life i.e., Swiss Life and Belimo Holding go up and down completely randomly.

Pair Corralation between Swiss Life and Belimo Holding

Assuming the 90 days trading horizon Swiss Life Holding is expected to under-perform the Belimo Holding. In addition to that, Swiss Life is 1.1 times more volatile than Belimo Holding. It trades about -0.14 of its total potential returns per unit of risk. Belimo Holding is currently generating about 0.14 per unit of volatility. If you would invest  58,400  in Belimo Holding on September 29, 2024 and sell it today you would earn a total of  1,800  from holding Belimo Holding or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Swiss Life Holding  vs.  Belimo Holding

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.

Belimo Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Swiss Life and Belimo Holding

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

The idea behind Swiss Life Holding and Belimo Holding 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.