Correlation Between St Galler and Zuger Kantonalbank

Can any of the company-specific risk be diversified away by investing in both St Galler and Zuger 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 Zuger 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 Zuger Kantonalbank, you can compare the effects of market volatilities on St Galler and Zuger 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 Zuger Kantonalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of St Galler and Zuger Kantonalbank.

Diversification Opportunities for St Galler and Zuger Kantonalbank

0.85

Correlation Coefficient

St Galler  Zuger Kantonalbank

Very poor diversification

The 3 months correlation between SGKN and Zuger is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding St Galler Kantonalbank and Zuger Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zuger 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 Zuger Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zuger Kantonalbank has no effect on the direction of St Galler i.e., St Galler and Zuger Kantonalbank go up and down completely randomly.

Pair Corralation between St Galler and Zuger Kantonalbank

Assuming the 90 days trading horizon St Galler Kantonalbank is expected to generate 0.65 times more return on investment than Zuger Kantonalbank. However, St Galler Kantonalbank is 1.55 times less risky than Zuger Kantonalbank. It trades about 0.26 of its potential returns per unit of risk. Zuger Kantonalbank is currently generating about 0.11 per unit of risk. If you would invest  43,650  in St Galler Kantonalbank on December 24, 2024 and sell it today you would earn a total of  4,450  from holding St Galler Kantonalbank or generate 10.19% 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.  Zuger 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 20 (%) 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.

Zuger Kantonalbank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zuger Kantonalbank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Zuger Kantonalbank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with St Galler and Zuger Kantonalbank

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

The idea behind St Galler Kantonalbank and Zuger 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..