Correlation Between Swiss Prime and PSP Swiss

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

By analyzing existing cross correlation between Swiss Prime Site and PSP Swiss Property, you can compare the effects of market volatilities on Swiss Prime and PSP Swiss 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 Prime with a short position of PSP Swiss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Prime and PSP Swiss.

Diversification Opportunities for Swiss Prime and PSP Swiss

0.97

Correlation Coefficient

Swiss Prime  PSP Swiss

Almost no diversification

The 3 months correlation between Swiss and PSP is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Prime Site and PSP Swiss Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSP Swiss Property and Swiss Prime 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 Prime Site are associated (or correlated) with PSP Swiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSP Swiss Property has no effect on the direction of Swiss Prime i.e., Swiss Prime and PSP Swiss go up and down completely randomly.

Pair Corralation between Swiss Prime and PSP Swiss

Assuming the 90 days trading horizon Swiss Prime Site is expected to generate 1.14 times more return on investment than PSP Swiss. However, Swiss Prime is 1.14 times more volatile than PSP Swiss Property. It trades about 0.05 of its potential returns per unit of risk. PSP Swiss Property is currently generating about -0.02 per unit of risk. If you would invest  10,410  in Swiss Prime Site on December 5, 2024 and sell it today you would earn a total of  100.00  from holding Swiss Prime Site or generate 0.96% return on investment over 90 days.

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

Swiss Prime Site  vs.  PSP Swiss Property

Swiss Prime Site

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Prime Site are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Swiss Prime may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PSP Swiss Property

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PSP Swiss Property are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, PSP Swiss 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 Prime and PSP Swiss

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

The idea behind Swiss Prime Site and PSP Swiss Property 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.