Correlation Between Graubuendner Kantonalbank and Basler Kantonalbank

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

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

Diversification Opportunities for Graubuendner Kantonalbank and Basler Kantonalbank

0.64

Correlation Coefficient

Graubuendner Kantonalbank  Basler Kantonalbank

Poor diversification

The 3 months correlation between Graubuendner and Basler is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Graubuendner Kantonalbank and Basler Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basler Kantonalbank and Graubuendner 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 Graubuendner Kantonalbank are associated (or correlated) with Basler Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basler Kantonalbank has no effect on the direction of Graubuendner Kantonalbank i.e., Graubuendner Kantonalbank and Basler Kantonalbank go up and down completely randomly.

Pair Corralation between Graubuendner Kantonalbank and Basler Kantonalbank

Assuming the 90 days trading horizon Graubuendner Kantonalbank is expected to under-perform the Basler Kantonalbank. But the stock apears to be less risky and, when comparing its historical volatility, Graubuendner Kantonalbank is 2.04 times less risky than Basler Kantonalbank. The stock trades about -0.22 of its potential returns per unit of risk. The Basler Kantonalbank is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  7,260  in Basler Kantonalbank on December 3, 2024 and sell it today you would earn a total of  600.00  from holding Basler Kantonalbank or generate 8.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Graubuendner Kantonalbank  vs.  Basler Kantonalbank

Graubuendner Kantonalbank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Graubuendner Kantonalbank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Graubuendner Kantonalbank is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Basler Kantonalbank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Basler Kantonalbank are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Basler Kantonalbank showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graubuendner Kantonalbank and Basler Kantonalbank

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

The idea behind Graubuendner Kantonalbank and Basler 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.