Correlation Between Compagnie Financiere and Luzerner Kantonalbank

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

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

Diversification Opportunities for Compagnie Financiere and Luzerner Kantonalbank

0.92

Correlation Coefficient

Compagnie Financiere  Luzerner Kantonalbank

Almost no diversification

The 3 months correlation between Compagnie and Luzerner is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financiere Tradition and Luzerner Kantonalbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luzerner Kantonalbank and Compagnie Financiere 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 Compagnie Financiere Tradition are associated (or correlated) with Luzerner Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luzerner Kantonalbank has no effect on the direction of Compagnie Financiere i.e., Compagnie Financiere and Luzerner Kantonalbank go up and down completely randomly.

Pair Corralation between Compagnie Financiere and Luzerner Kantonalbank

Assuming the 90 days trading horizon Compagnie Financiere Tradition is expected to generate 2.72 times more return on investment than Luzerner Kantonalbank. However, Compagnie Financiere is 2.72 times more volatile than Luzerner Kantonalbank AG. It trades about 0.16 of its potential returns per unit of risk. Luzerner Kantonalbank AG is currently generating about 0.2 per unit of risk. If you would invest  16,000  in Compagnie Financiere Tradition on November 28, 2024 and sell it today you would earn a total of  3,100  from holding Compagnie Financiere Tradition or generate 19.38% return on investment over 90 days.

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

Compagnie Financiere Tradition  vs.  Luzerner Kantonalbank AG

Compagnie Financiere

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financiere Tradition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Compagnie Financiere showed solid returns over the last few months and may actually be approaching a breakup point.

Luzerner Kantonalbank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Luzerner Kantonalbank AG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Luzerner Kantonalbank may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Compagnie Financiere and Luzerner Kantonalbank

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

The idea behind Compagnie Financiere Tradition and Luzerner Kantonalbank AG 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.