Correlation Between Helvetia Holding and Luzerner Kantonalbank

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

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

Diversification Opportunities for Helvetia Holding and Luzerner Kantonalbank

0.59

Correlation Coefficient

Helvetia Holding  Luzerner Kantonalbank

Very weak diversification

The 3 months correlation between Helvetia and Luzerner is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Helvetia Holding AG and Luzerner Kantonalbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luzerner Kantonalbank and Helvetia Holding 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 Helvetia Holding AG 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 Helvetia Holding i.e., Helvetia Holding and Luzerner Kantonalbank go up and down completely randomly.

Pair Corralation between Helvetia Holding and Luzerner Kantonalbank

Assuming the 90 days trading horizon Helvetia Holding AG is expected to under-perform the Luzerner Kantonalbank. In addition to that, Helvetia Holding is 1.57 times more volatile than Luzerner Kantonalbank AG. It trades about -0.16 of its total potential returns per unit of risk. Luzerner Kantonalbank AG is currently generating about -0.09 per unit of volatility. If you would invest  6,410  in Luzerner Kantonalbank AG on September 26, 2024 and sell it today you would lose (80.00) from holding Luzerner Kantonalbank AG or give up 1.25% of portfolio value over 90 days.

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

Helvetia Holding AG  vs.  Luzerner Kantonalbank AG

Helvetia Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Helvetia Holding AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Helvetia Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Luzerner Kantonalbank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Luzerner Kantonalbank AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Luzerner Kantonalbank is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Helvetia Holding and Luzerner Kantonalbank

The main advantage of trading using opposite Helvetia Holding and Luzerner Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Helvetia Holding 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 Helvetia Holding AG 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.