Correlation Between Banque Cantonale and Swiss Prime

Can any of the company-specific risk be diversified away by investing in both Banque Cantonale and Swiss Prime 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 Banque Cantonale and Swiss Prime into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banque Cantonale and Swiss Prime Site, you can compare the effects of market volatilities on Banque Cantonale and Swiss Prime 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 Banque Cantonale with a short position of Swiss Prime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banque Cantonale and Swiss Prime.

Diversification Opportunities for Banque Cantonale and Swiss Prime

0.75

Correlation Coefficient

Banque Cantonale  Swiss Prime

Poor diversification

The 3 months correlation between Banque and Swiss is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Banque Cantonale and Swiss Prime Site in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Prime Site and Banque Cantonale 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 Banque Cantonale are associated (or correlated) with Swiss Prime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Prime Site has no effect on the direction of Banque Cantonale i.e., Banque Cantonale and Swiss Prime go up and down completely randomly.

Pair Corralation between Banque Cantonale and Swiss Prime

Assuming the 90 days trading horizon Banque Cantonale is expected to generate 1.02 times more return on investment than Swiss Prime. However, Banque Cantonale is 1.02 times more volatile than Swiss Prime Site. It trades about 0.31 of its potential returns per unit of risk. Swiss Prime Site is currently generating about 0.18 per unit of risk. If you would invest  8,325  in Banque Cantonale on December 27, 2024 and sell it today you would earn a total of  1,470  from holding Banque Cantonale or generate 17.66% return on investment over 90 days.

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

Banque Cantonale  vs.  Swiss Prime Site

Banque Cantonale

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Banque Cantonale are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Banque Cantonale showed solid returns over the last few months and may actually be approaching a breakup point.

Swiss Prime Site

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Prime Site are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Swiss Prime may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Banque Cantonale and Swiss Prime

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

The idea behind Banque Cantonale and Swiss Prime Site 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.