Correlation Between SwissCom and Telecom Italia

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

By analyzing existing cross correlation between SwissCom AG and Telecom Italia SpA, you can compare the effects of market volatilities on SwissCom and Telecom Italia 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 SwissCom with a short position of Telecom Italia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SwissCom and Telecom Italia.

Diversification Opportunities for SwissCom and Telecom Italia

0.68

Correlation Coefficient

SwissCom  Telecom Italia

Poor diversification

The 3 months correlation between SwissCom and Telecom is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SwissCom AG and Telecom Italia SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Italia SpA and SwissCom 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 SwissCom AG are associated (or correlated) with Telecom Italia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Italia SpA has no effect on the direction of SwissCom i.e., SwissCom and Telecom Italia go up and down completely randomly.

Pair Corralation between SwissCom and Telecom Italia

Assuming the 90 days horizon SwissCom is expected to generate 2.63 times less return on investment than Telecom Italia. But when comparing it to its historical volatility, SwissCom AG is 1.32 times less risky than Telecom Italia. It trades about 0.07 of its potential returns per unit of risk. Telecom Italia SpA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  47.00  in Telecom Italia SpA on July 25, 2025 and sell it today you would earn a total of  6.00  from holding Telecom Italia SpA or generate 12.77% return on investment over 90 days.

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

SwissCom AG  vs.  Telecom Italia SpA

SwissCom AG

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in SwissCom AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, SwissCom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Telecom Italia SpA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Italia SpA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Telecom Italia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SwissCom and Telecom Italia

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

The idea behind SwissCom AG and Telecom Italia SpA 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.