Correlation Between St Galler and Unilever PLC

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

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

Diversification Opportunities for St Galler and Unilever PLC

-0.37

Correlation Coefficient

St Galler  Unilever PLC

Very good diversification

The 3 months correlation between 0QQZ and Unilever is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding St Galler Kantonalbank and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC and St Galler 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 St Galler Kantonalbank are associated (or correlated) with Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC has no effect on the direction of St Galler i.e., St Galler and Unilever PLC go up and down completely randomly.

Pair Corralation between St Galler and Unilever PLC

Assuming the 90 days trading horizon St Galler Kantonalbank is expected to generate 0.79 times more return on investment than Unilever PLC. However, St Galler Kantonalbank is 1.27 times less risky than Unilever PLC. It trades about 0.38 of its potential returns per unit of risk. Unilever PLC is currently generating about 0.04 per unit of risk. If you would invest  42,850  in St Galler Kantonalbank on October 22, 2024 and sell it today you would earn a total of  2,400  from holding St Galler Kantonalbank or generate 5.6% return on investment over 90 days.

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

St Galler Kantonalbank  vs.  Unilever PLC

St Galler Kantonalbank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in St Galler Kantonalbank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, St Galler is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Unilever PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unilever PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Unilever PLC is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with St Galler and Unilever PLC

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

The idea behind St Galler Kantonalbank and Unilever 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.