Correlation Between Zuger Kantonalbank and Helvetia Holding
Can any of the company-specific risk be diversified away by investing in both Zuger Kantonalbank and Helvetia Holding 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 Zuger Kantonalbank and Helvetia Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zuger Kantonalbank and Helvetia Holding AG, you can compare the effects of market volatilities on Zuger Kantonalbank and Helvetia Holding 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 Zuger Kantonalbank with a short position of Helvetia Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zuger Kantonalbank and Helvetia Holding.
Diversification Opportunities for Zuger Kantonalbank and Helvetia Holding
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zuger and Helvetia is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Zuger Kantonalbank and Helvetia Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helvetia Holding and Zuger 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 Zuger Kantonalbank are associated (or correlated) with Helvetia Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helvetia Holding has no effect on the direction of Zuger Kantonalbank i.e., Zuger Kantonalbank and Helvetia Holding go up and down completely randomly.
Pair Corralation between Zuger Kantonalbank and Helvetia Holding
Assuming the 90 days trading horizon Zuger Kantonalbank is expected to under-perform the Helvetia Holding. But the stock apears to be less risky and, when comparing its historical volatility, Zuger Kantonalbank is 2.42 times less risky than Helvetia Holding. The stock trades about -0.08 of its potential returns per unit of risk. The Helvetia Holding AG is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 13,240 in Helvetia Holding AG on September 4, 2024 and sell it today you would earn a total of 1,890 from holding Helvetia Holding AG or generate 14.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zuger Kantonalbank vs. Helvetia Holding AG
Performance |
| Timeline |
| Zuger Kantonalbank |
| Helvetia Holding |
Zuger Kantonalbank and Helvetia Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zuger Kantonalbank and Helvetia Holding
The main advantage of trading using opposite Zuger Kantonalbank and Helvetia Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zuger Kantonalbank position performs unexpectedly, Helvetia Holding 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 Helvetia Holding will offset losses from the drop in Helvetia Holding's long position.| Zuger Kantonalbank vs. Helvetia Holding AG | Zuger Kantonalbank vs. Swiss Life Holding | Zuger Kantonalbank vs. Baloise Holding AG | Zuger Kantonalbank vs. Logitech International SA |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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