Correlation Between HBM Healthcare and Glarner Kantonalbank
Can any of the company-specific risk be diversified away by investing in both HBM Healthcare and Glarner Kantonalbank 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 HBM Healthcare and Glarner Kantonalbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HBM Healthcare Investments and Glarner Kantonalbank, you can compare the effects of market volatilities on HBM Healthcare and Glarner Kantonalbank 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 HBM Healthcare with a short position of Glarner Kantonalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of HBM Healthcare and Glarner Kantonalbank.
Diversification Opportunities for HBM Healthcare and Glarner Kantonalbank
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HBM and Glarner is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding HBM Healthcare Investments and Glarner Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glarner Kantonalbank and HBM Healthcare 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 HBM Healthcare Investments are associated (or correlated) with Glarner Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glarner Kantonalbank has no effect on the direction of HBM Healthcare i.e., HBM Healthcare and Glarner Kantonalbank go up and down completely randomly.
Pair Corralation between HBM Healthcare and Glarner Kantonalbank
Assuming the 90 days trading horizon HBM Healthcare is expected to generate 1.22 times less return on investment than Glarner Kantonalbank. In addition to that, HBM Healthcare is 2.28 times more volatile than Glarner Kantonalbank. It trades about 0.08 of its total potential returns per unit of risk. Glarner Kantonalbank is currently generating about 0.22 per unit of volatility. If you would invest 2,080 in Glarner Kantonalbank on December 3, 2024 and sell it today you would earn a total of 190.00 from holding Glarner Kantonalbank or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.33% |
| Values | Daily Returns |
HBM Healthcare Investments vs. Glarner Kantonalbank
Performance |
| Timeline |
| HBM Healthcare Inves |
| Glarner Kantonalbank |
HBM Healthcare and Glarner Kantonalbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HBM Healthcare and Glarner Kantonalbank
The main advantage of trading using opposite HBM Healthcare and Glarner Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HBM Healthcare position performs unexpectedly, Glarner Kantonalbank 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 Glarner Kantonalbank will offset losses from the drop in Glarner Kantonalbank's long position.| HBM Healthcare vs. BB Biotech AG | ||
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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