Correlation Between St Galler and Glarner Kantonalbank

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

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

Diversification Opportunities for St Galler and Glarner Kantonalbank

0.81

Correlation Coefficient

St Galler  Glarner Kantonalbank

Very poor diversification

The 3 months correlation between SGKN and Glarner is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding St Galler Kantonalbank and Glarner Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glarner Kantonalbank and St Galler 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 St Galler Kantonalbank are associated (or correlated) with Glarner Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glarner Kantonalbank has no effect on the direction of St Galler i.e., St Galler and Glarner Kantonalbank go up and down completely randomly.

Pair Corralation between St Galler and Glarner Kantonalbank

Assuming the 90 days trading horizon St Galler Kantonalbank is expected to generate 1.01 times more return on investment than Glarner Kantonalbank. However, St Galler is 1.01 times more volatile than Glarner Kantonalbank. It trades about 0.25 of its potential returns per unit of risk. Glarner Kantonalbank is currently generating about 0.2 per unit of risk. If you would invest  43,750  in St Galler Kantonalbank on December 30, 2024 and sell it today you would earn a total of  4,800  from holding St Galler Kantonalbank or generate 10.97% return on investment over 90 days.

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

St Galler Kantonalbank  vs.  Glarner Kantonalbank

St Galler Kantonalbank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in St Galler Kantonalbank are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, St Galler may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Glarner Kantonalbank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Glarner Kantonalbank are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Glarner Kantonalbank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with St Galler and Glarner Kantonalbank

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

The idea behind St Galler Kantonalbank and Glarner 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.