Correlation Between Berner Kantonalbank and Zuger Kantonalbank

Can any of the company-specific risk be diversified away by investing in both Berner Kantonalbank and Zuger Kantonalbank 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 Zuger Kantonalbank 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 Zuger Kantonalbank, you can compare the effects of market volatilities on Berner Kantonalbank and Zuger Kantonalbank 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 Zuger Kantonalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berner Kantonalbank and Zuger Kantonalbank.

Diversification Opportunities for Berner Kantonalbank and Zuger Kantonalbank

0.94

Correlation Coefficient

Berner Kantonalbank  Zuger Kantonalbank

Almost no diversification

The 3 months correlation between Berner and Zuger is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Berner Kantonalbank AG and Zuger Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zuger Kantonalbank 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 Zuger Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zuger Kantonalbank has no effect on the direction of Berner Kantonalbank i.e., Berner Kantonalbank and Zuger Kantonalbank go up and down completely randomly.

Pair Corralation between Berner Kantonalbank and Zuger Kantonalbank

Assuming the 90 days trading horizon Berner Kantonalbank is expected to generate 1.39 times less return on investment than Zuger Kantonalbank. But when comparing it to its historical volatility, Berner Kantonalbank AG is 1.8 times less risky than Zuger Kantonalbank. It trades about 0.22 of its potential returns per unit of risk. Zuger Kantonalbank is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  814,000  in Zuger Kantonalbank on December 2, 2024 and sell it today you would earn a total of  78,000  from holding Zuger Kantonalbank or generate 9.58% return on investment over 90 days.

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

Berner Kantonalbank AG  vs.  Zuger Kantonalbank

Berner Kantonalbank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Berner Kantonalbank AG are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Berner Kantonalbank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Zuger Kantonalbank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zuger Kantonalbank are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Zuger Kantonalbank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Berner Kantonalbank and Zuger Kantonalbank

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

The idea behind Berner Kantonalbank AG and Zuger 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.