Correlation Between Graubuendner Kantonalbank and Hubersuhner
Can any of the company-specific risk be diversified away by investing in both Graubuendner Kantonalbank and Hubersuhner 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 Graubuendner Kantonalbank and Hubersuhner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graubuendner Kantonalbank and Hubersuhner AG, you can compare the effects of market volatilities on Graubuendner Kantonalbank and Hubersuhner 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 Graubuendner Kantonalbank with a short position of Hubersuhner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graubuendner Kantonalbank and Hubersuhner.
Diversification Opportunities for Graubuendner Kantonalbank and Hubersuhner
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Graubuendner and Hubersuhner is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Graubuendner Kantonalbank and Hubersuhner AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubersuhner AG and Graubuendner Kantonalbank 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 Graubuendner Kantonalbank are associated (or correlated) with Hubersuhner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubersuhner AG has no effect on the direction of Graubuendner Kantonalbank i.e., Graubuendner Kantonalbank and Hubersuhner go up and down completely randomly.
Pair Corralation between Graubuendner Kantonalbank and Hubersuhner
Assuming the 90 days trading horizon Graubuendner Kantonalbank is expected to generate 0.57 times more return on investment than Hubersuhner. However, Graubuendner Kantonalbank is 1.77 times less risky than Hubersuhner. It trades about 0.08 of its potential returns per unit of risk. Hubersuhner AG is currently generating about -0.1 per unit of risk. If you would invest 170,000 in Graubuendner Kantonalbank on November 2, 2024 and sell it today you would earn a total of 8,000 from holding Graubuendner Kantonalbank or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graubuendner Kantonalbank vs. Hubersuhner AG
Performance |
| Timeline |
| Graubuendner Kantonalbank |
| Hubersuhner AG |
Graubuendner Kantonalbank and Hubersuhner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graubuendner Kantonalbank and Hubersuhner
The main advantage of trading using opposite Graubuendner Kantonalbank and Hubersuhner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graubuendner Kantonalbank position performs unexpectedly, Hubersuhner 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 Hubersuhner will offset losses from the drop in Hubersuhner's long position.The idea behind Graubuendner Kantonalbank and Hubersuhner AG 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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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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