Correlation Between Cemat AS and PSP Swiss

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

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

Diversification Opportunities for Cemat AS and PSP Swiss

-0.16

Correlation Coefficient

Cemat AS  PSP Swiss

Good diversification

The 3 months correlation between Cemat and PSP is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cemat AS 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 Cemat AS 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 Cemat AS 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 Cemat AS i.e., Cemat AS and PSP Swiss go up and down completely randomly.

Pair Corralation between Cemat AS and PSP Swiss

Assuming the 90 days trading horizon Cemat AS is expected to generate 1.6 times more return on investment than PSP Swiss. However, Cemat AS is 1.6 times more volatile than PSP Swiss Property. It trades about 0.04 of its potential returns per unit of risk. PSP Swiss Property is currently generating about -0.05 per unit of risk. If you would invest  94.00  in Cemat AS on April 24, 2025 and sell it today you would earn a total of  3.00  from holding Cemat AS or generate 3.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Cemat AS  vs.  PSP Swiss Property

Cemat AS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cemat AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Cemat AS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

PSP Swiss Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days PSP Swiss Property has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Cemat AS and PSP Swiss

The main advantage of trading using opposite Cemat AS and PSP Swiss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cemat AS 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 Cemat AS 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.