Correlation Between Swiss Helvetia and Japan Smaller

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

By analyzing existing cross correlation between Swiss Helvetia Closed and Japan Smaller Capitalization, you can compare the effects of market volatilities on Swiss Helvetia and Japan Smaller 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 Helvetia with a short position of Japan Smaller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Helvetia and Japan Smaller.

Diversification Opportunities for Swiss Helvetia and Japan Smaller

0.75

Correlation Coefficient

Swiss Helvetia  Japan Smaller

Poor diversification

The 3 months correlation between Swiss and Japan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Helvetia Closed and Japan Smaller Capitalization in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Smaller Capita and Swiss Helvetia 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 Helvetia Closed are associated (or correlated) with Japan Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Smaller Capita has no effect on the direction of Swiss Helvetia i.e., Swiss Helvetia and Japan Smaller go up and down completely randomly.

Pair Corralation between Swiss Helvetia and Japan Smaller

Considering the 90-day investment horizon Swiss Helvetia Closed is expected to generate 1.27 times more return on investment than Japan Smaller. However, Swiss Helvetia is 1.27 times more volatile than Japan Smaller Capitalization. It trades about 0.29 of its potential returns per unit of risk. Japan Smaller Capitalization is currently generating about 0.2 per unit of risk. If you would invest  740.00  in Swiss Helvetia Closed on December 27, 2024 and sell it today you would earn a total of  165.00  from holding Swiss Helvetia Closed or generate 22.3% return on investment over 90 days.

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

Swiss Helvetia Closed  vs.  Japan Smaller Capitalization

Swiss Helvetia Closed

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Helvetia Closed are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly uncertain basic indicators, Swiss Helvetia showed solid returns over the last few months and may actually be approaching a breakup point.

Japan Smaller Capita

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Smaller Capitalization are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly fragile basic indicators, Japan Smaller may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Swiss Helvetia and Japan Smaller

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

The idea behind Swiss Helvetia Closed and Japan Smaller Capitalization 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.