Correlation Between Berner Kantonalbank and Hardide PLC

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

By analyzing existing cross correlation between Berner Kantonalbank AG and Hardide PLC, you can compare the effects of market volatilities on Berner Kantonalbank and Hardide PLC 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 Berner Kantonalbank with a short position of Hardide PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berner Kantonalbank and Hardide PLC.

Diversification Opportunities for Berner Kantonalbank and Hardide PLC

0.01

Correlation Coefficient

Berner Kantonalbank  Hardide PLC

Significant diversification

The 3 months correlation between Berner and Hardide is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Berner Kantonalbank AG and Hardide PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hardide PLC and Berner 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 Berner Kantonalbank AG are associated (or correlated) with Hardide PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hardide PLC has no effect on the direction of Berner Kantonalbank i.e., Berner Kantonalbank and Hardide PLC go up and down completely randomly.

Pair Corralation between Berner Kantonalbank and Hardide PLC

Assuming the 90 days trading horizon Berner Kantonalbank is expected to generate 1.2 times less return on investment than Hardide PLC. But when comparing it to its historical volatility, Berner Kantonalbank AG is 6.87 times less risky than Hardide PLC. It trades about 0.07 of its potential returns per unit of risk. Hardide PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  575.00  in Hardide PLC on October 8, 2024 and sell it today you would lose (12.00) from holding Hardide PLC or give up 2.09% of portfolio value over 90 days.

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

Berner Kantonalbank AG  vs.  Hardide PLC

Berner Kantonalbank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Berner Kantonalbank AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Berner Kantonalbank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hardide PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hardide PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hardide PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Berner Kantonalbank and Hardide PLC

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

The idea behind Berner Kantonalbank AG and Hardide PLC 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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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.