Correlation Between Swiss Re and Santhera Pharmaceuticals

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

By analyzing existing cross correlation between Swiss Re AG and Santhera Pharmaceuticals Holding, you can compare the effects of market volatilities on Swiss Re and Santhera Pharmaceuticals 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 Re with a short position of Santhera Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Re and Santhera Pharmaceuticals.

Diversification Opportunities for Swiss Re and Santhera Pharmaceuticals

-0.63

Correlation Coefficient

Swiss Re  Santhera Pharmaceuticals

Excellent diversification

The 3 months correlation between Swiss and Santhera is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Re AG and Santhera Pharmaceuticals Holdi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santhera Pharmaceuticals and Swiss Re 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 Re AG are associated (or correlated) with Santhera Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santhera Pharmaceuticals has no effect on the direction of Swiss Re i.e., Swiss Re and Santhera Pharmaceuticals go up and down completely randomly.

Pair Corralation between Swiss Re and Santhera Pharmaceuticals

Assuming the 90 days trading horizon Swiss Re AG is expected to generate 0.47 times more return on investment than Santhera Pharmaceuticals. However, Swiss Re AG is 2.13 times less risky than Santhera Pharmaceuticals. It trades about 0.1 of its potential returns per unit of risk. Santhera Pharmaceuticals Holding is currently generating about 0.01 per unit of risk. If you would invest  9,511  in Swiss Re AG on September 14, 2024 and sell it today you would earn a total of  3,844  from holding Swiss Re AG or generate 40.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.63%
Values	Daily Returns

Swiss Re AG  vs.  Santhera Pharmaceuticals Holdi

Swiss Re AG

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Re AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Swiss Re showed solid returns over the last few months and may actually be approaching a breakup point.

Santhera Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Santhera Pharmaceuticals Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Santhera Pharmaceuticals 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 Re and Santhera Pharmaceuticals

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

The idea behind Swiss Re AG and Santhera Pharmaceuticals Holding 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.