Correlation Between Adval Tech and St Galler

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

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

Diversification Opportunities for Adval Tech and St Galler

-0.61

Correlation Coefficient

Adval Tech  St Galler

Excellent diversification

The 3 months correlation between Adval and SGKN is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Adval Tech Holding 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 Adval Tech 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 Adval Tech Holding 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 Adval Tech i.e., Adval Tech and St Galler go up and down completely randomly.

Pair Corralation between Adval Tech and St Galler

Assuming the 90 days trading horizon Adval Tech Holding is expected to under-perform the St Galler. In addition to that, Adval Tech is 3.54 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 0.11 per unit of volatility. If you would invest  41,700  in St Galler Kantonalbank on September 5, 2024 and sell it today you would earn a total of  2,200  from holding St Galler Kantonalbank or generate 5.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	70.77%
Values	Daily Returns

Adval Tech Holding  vs.  St Galler Kantonalbank

Adval Tech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adval Tech Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

St Galler Kantonalbank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in St Galler Kantonalbank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, St Galler is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Adval Tech and St Galler

The main advantage of trading using opposite Adval Tech and St Galler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adval Tech 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.

The idea behind Adval Tech Holding and St Galler Kantonalbank 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.