Correlation Between CPH Chemie and Luzerner Kantonalbank

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

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

Diversification Opportunities for CPH Chemie and Luzerner Kantonalbank

0.23

Correlation Coefficient

CPH Chemie  Luzerner Kantonalbank

Modest diversification

The 3 months correlation between CPH and Luzerner is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CPH Chemie und and Luzerner Kantonalbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luzerner Kantonalbank and CPH Chemie 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 CPH Chemie und 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 CPH Chemie i.e., CPH Chemie and Luzerner Kantonalbank go up and down completely randomly.

Pair Corralation between CPH Chemie and Luzerner Kantonalbank

Assuming the 90 days trading horizon CPH Chemie und is expected to under-perform the Luzerner Kantonalbank. In addition to that, CPH Chemie is 2.58 times more volatile than Luzerner Kantonalbank AG. It trades about -0.01 of its total potential returns per unit of risk. Luzerner Kantonalbank AG is currently generating about 0.21 per unit of volatility. If you would invest  6,390  in Luzerner Kantonalbank AG on December 30, 2024 and sell it today you would earn a total of  650.00  from holding Luzerner Kantonalbank AG or generate 10.17% return on investment over 90 days.

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

CPH Chemie und  vs.  Luzerner Kantonalbank AG

CPH Chemie und

Risk-Adjusted Performance

Very Weak

Over the last 90 days CPH Chemie und has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CPH Chemie is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Luzerner Kantonalbank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Luzerner Kantonalbank AG are ranked lower than 16 (%) 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 April 2025.

Pair Trading with CPH Chemie and Luzerner Kantonalbank

The main advantage of trading using opposite CPH Chemie and Luzerner Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPH Chemie 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 CPH Chemie und 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.