Correlation Between Swiss Life and Evolva Holding

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

Diversification Opportunities for Swiss Life and Evolva Holding

0.14

Correlation Coefficient

Swiss Life  Evolva Holding

Average diversification

The 3 months correlation between Swiss and Evolva is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and Evolva Holding SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolva Holding SA 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 Evolva Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolva Holding SA has no effect on the direction of Swiss Life i.e., Swiss Life and Evolva Holding go up and down completely randomly.

Pair Corralation between Swiss Life and Evolva Holding

Assuming the 90 days trading horizon Swiss Life Holding is expected to generate 0.18 times more return on investment than Evolva Holding. However, Swiss Life Holding is 5.56 times less risky than Evolva Holding. It trades about 0.09 of its potential returns per unit of risk. Evolva Holding SA is currently generating about -0.05 per unit of risk. If you would invest  42,937  in Swiss Life Holding on September 20, 2024 and sell it today you would earn a total of  25,963  from holding Swiss Life Holding or generate 60.47% return on investment over 90 days.

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

Swiss Life Holding  vs.  Evolva Holding SA

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.

Evolva Holding SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolva Holding SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Evolva 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 Evolva Holding

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

The idea behind Swiss Life Holding and Evolva Holding 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.