Correlation Between SwissCom and TelstraLimited

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

By analyzing existing cross correlation between SwissCom AG and Telstra Limited, you can compare the effects of market volatilities on SwissCom and TelstraLimited 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 TelstraLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of SwissCom and TelstraLimited.

Diversification Opportunities for SwissCom and TelstraLimited

-0.17

Correlation Coefficient

SwissCom  TelstraLimited

Good diversification

The 3 months correlation between SwissCom and TelstraLimited is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SwissCom AG and Telstra Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telstra Limited 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 TelstraLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telstra Limited has no effect on the direction of SwissCom i.e., SwissCom and TelstraLimited go up and down completely randomly.

Pair Corralation between SwissCom and TelstraLimited

Assuming the 90 days horizon SwissCom is expected to generate 1.17 times less return on investment than TelstraLimited. But when comparing it to its historical volatility, SwissCom AG is 1.12 times less risky than TelstraLimited. It trades about 0.06 of its potential returns per unit of risk. Telstra Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,172  in Telstra Limited on October 7, 2025 and sell it today you would earn a total of  465.00  from holding Telstra Limited or generate 39.68% return on investment over 90 days.

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

SwissCom AG  vs.  Telstra Limited

SwissCom AG

Risk-Adjusted Performance

Weakest

Over the last 90 days SwissCom AG has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Telstra Limited

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Telstra Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, TelstraLimited is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SwissCom and TelstraLimited

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

The idea behind SwissCom AG and Telstra Limited 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.