Correlation Between Swiss Life and DATAGROUP

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

Diversification Opportunities for Swiss Life and DATAGROUP

-0.25

Correlation Coefficient

Swiss Life  DATAGROUP

Very good diversification

The 3 months correlation between Swiss and DATAGROUP is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and DATAGROUP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATAGROUP SE 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 DATAGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATAGROUP SE has no effect on the direction of Swiss Life i.e., Swiss Life and DATAGROUP go up and down completely randomly.

Pair Corralation between Swiss Life and DATAGROUP

Assuming the 90 days trading horizon Swiss Life Holding is expected to generate 0.97 times more return on investment than DATAGROUP. However, Swiss Life Holding is 1.03 times less risky than DATAGROUP. It trades about 0.03 of its potential returns per unit of risk. DATAGROUP SE is currently generating about 0.02 per unit of risk. If you would invest  3,700  in Swiss Life Holding on October 26, 2024 and sell it today you would earn a total of  120.00  from holding Swiss Life Holding or generate 3.24% return on investment over 90 days.

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

Swiss Life Holding  vs.  DATAGROUP SE

Swiss Life Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Life Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Swiss Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

DATAGROUP SE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DATAGROUP SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, DATAGROUP is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Swiss Life and DATAGROUP

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

The idea behind Swiss Life Holding and DATAGROUP SE 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.