Correlation Between Swiss Life and Ecotel Communication

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

Diversification Opportunities for Swiss Life and Ecotel Communication

-0.07

Correlation Coefficient

Swiss Life  Ecotel Communication

Good diversification

The 3 months correlation between Swiss and Ecotel is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and ecotel communication ag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ecotel communication 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 Ecotel Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ecotel communication has no effect on the direction of Swiss Life i.e., Swiss Life and Ecotel Communication go up and down completely randomly.

Pair Corralation between Swiss Life and Ecotel Communication

Assuming the 90 days trading horizon Swiss Life Holding is expected to generate 0.81 times more return on investment than Ecotel Communication. However, Swiss Life Holding is 1.23 times less risky than Ecotel Communication. It trades about 0.05 of its potential returns per unit of risk. ecotel communication ag is currently generating about -0.02 per unit of risk. If you would invest  2,364  in Swiss Life Holding on October 23, 2024 and sell it today you would earn a total of  1,536  from holding Swiss Life Holding or generate 64.97% return on investment over 90 days.

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

Swiss Life Holding  vs.  ecotel communication ag

Swiss Life Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Life Holding are ranked lower than 1 (%) 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.

ecotel communication

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ecotel communication ag are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Ecotel Communication may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Swiss Life and Ecotel Communication

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

The idea behind Swiss Life Holding and ecotel communication 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .