Correlation Between Swiss Leader and CSIF I

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

By analyzing existing cross correlation between Swiss Leader Price and CSIF I Real, you can compare the effects of market volatilities on Swiss Leader and CSIF I 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 Leader with a short position of CSIF I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Leader and CSIF I.

Diversification Opportunities for Swiss Leader and CSIF I

-0.57

Correlation Coefficient

Swiss Leader  CSIF I

Excellent diversification

The 3 months correlation between Swiss and CSIF is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price and CSIF I Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSIF I Real and Swiss Leader 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 Leader Price are associated (or correlated) with CSIF I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSIF I Real has no effect on the direction of Swiss Leader i.e., Swiss Leader and CSIF I go up and down completely randomly.

Pair Corralation between Swiss Leader and CSIF I

Assuming the 90 days trading horizon Swiss Leader is expected to generate 1.94 times less return on investment than CSIF I. In addition to that, Swiss Leader is 1.14 times more volatile than CSIF I Real. It trades about 0.03 of its total potential returns per unit of risk. CSIF I Real is currently generating about 0.06 per unit of volatility. If you would invest  165,159  in CSIF I Real on September 28, 2024 and sell it today you would earn a total of  35,089  from holding CSIF I Real or generate 21.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Swiss Leader Price  vs.  CSIF I Real

Pair Trading with Swiss Leader and CSIF I

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

The idea behind Swiss Leader Price and CSIF I Real 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.