Correlation Between Swiss Life and Lem Holding

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

Diversification Opportunities for Swiss Life and Lem Holding

0.73

Correlation Coefficient

Swiss Life  Lem Holding

Poor diversification

The 3 months correlation between Swiss and Lem is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and Lem Holding SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lem Holding SA 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 Lem Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lem Holding SA has no effect on the direction of Swiss Life i.e., Swiss Life and Lem Holding go up and down completely randomly.

Pair Corralation between Swiss Life and Lem Holding

Assuming the 90 days trading horizon Swiss Life is expected to generate 3.32 times less return on investment than Lem Holding. But when comparing it to its historical volatility, Swiss Life Holding is 2.74 times less risky than Lem Holding. It trades about 0.21 of its potential returns per unit of risk. Lem Holding SA is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  65,800  in Lem Holding SA on April 23, 2025 and sell it today you would earn a total of  22,900  from holding Lem Holding SA or generate 34.8% return on investment over 90 days.

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

Swiss Life Holding  vs.  Lem Holding SA

Swiss Life Holding

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Life Holding are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Swiss Life may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Lem Holding SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lem Holding SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lem Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Swiss Life and Lem Holding

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

The idea behind Swiss Life Holding and Lem Holding SA 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.