Correlation Between Swiss Leader and St Galler
Can any of the company-specific risk be diversified away by investing in both Swiss Leader and St Galler 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 Leader and St Galler into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Leader Price and St Galler Kantonalbank, you can compare the effects of market volatilities on Swiss Leader and St Galler 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 Leader with a short position of St Galler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Leader and St Galler.
Diversification Opportunities for Swiss Leader and St Galler
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Swiss and SGKN is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price and St Galler Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Galler Kantonalbank and Swiss Leader 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 Leader Price are associated (or correlated) with St Galler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Galler Kantonalbank has no effect on the direction of Swiss Leader i.e., Swiss Leader and St Galler go up and down completely randomly.
Pair Corralation between Swiss Leader and St Galler
Assuming the 90 days trading horizon Swiss Leader Price is expected to under-perform the St Galler. In addition to that, Swiss Leader is 2.18 times more volatile than St Galler Kantonalbank. It trades about -0.16 of its total potential returns per unit of risk. St Galler Kantonalbank is currently generating about -0.13 per unit of volatility. If you would invest 42,700 in St Galler Kantonalbank on August 28, 2024 and sell it today you would lose (500.00) from holding St Galler Kantonalbank or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swiss Leader Price vs. St Galler Kantonalbank
Performance |
| Timeline |
Swiss Leader and St Galler Volatility Contrast
Predicted Return Density |
| Returns |
Swiss Leader Price
Pair trading matchups for Swiss Leader
St Galler Kantonalbank
Pair trading matchups for St Galler
Pair Trading with Swiss Leader and St Galler
The main advantage of trading using opposite Swiss Leader and St Galler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Leader position performs unexpectedly, St Galler 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 St Galler will offset losses from the drop in St Galler's long position.| Swiss Leader vs. Liechtensteinische Landesbank AG | Swiss Leader vs. BB Biotech AG | Swiss Leader vs. Luzerner Kantonalbank AG | Swiss Leader vs. Swiss Steel Holding |
| St Galler vs. Banque Cantonale | St Galler vs. Luzerner Kantonalbank AG | St Galler vs. Berner Kantonalbank AG | St Galler vs. Helvetia Holding AG |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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