Correlation Between Valiant Holding and Basler Kantonalbank
Can any of the company-specific risk be diversified away by investing in both Valiant Holding 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 Valiant Holding and Basler Kantonalbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valiant Holding AG and Basler Kantonalbank, you can compare the effects of market volatilities on Valiant Holding 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 Valiant Holding with a short position of Basler Kantonalbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valiant Holding and Basler Kantonalbank.
Diversification Opportunities for Valiant Holding and Basler Kantonalbank
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Valiant and Basler is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Valiant Holding AG and Basler Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basler Kantonalbank and Valiant 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 Valiant Holding AG 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 Valiant Holding i.e., Valiant Holding and Basler Kantonalbank go up and down completely randomly.
Pair Corralation between Valiant Holding and Basler Kantonalbank
Assuming the 90 days trading horizon Valiant Holding is expected to generate 1.34 times less return on investment than Basler Kantonalbank. In addition to that, Valiant Holding is 1.06 times more volatile than Basler Kantonalbank. It trades about 0.03 of its total potential returns per unit of risk. Basler Kantonalbank is currently generating about 0.05 per unit of volatility. If you would invest 5,648 in Basler Kantonalbank on September 26, 2024 and sell it today you would earn a total of 1,152 from holding Basler Kantonalbank or generate 20.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.8% |
Values | Daily Returns |
Valiant Holding AG vs. Basler Kantonalbank
Performance |
Timeline |
Valiant Holding AG |
Basler Kantonalbank |
Valiant Holding and Basler Kantonalbank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Valiant Holding and Basler Kantonalbank
The main advantage of trading using opposite Valiant Holding and Basler Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valiant Holding 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.Valiant Holding vs. Banque Cantonale | Valiant Holding vs. St Galler Kantonalbank | Valiant Holding vs. Berner Kantonalbank AG | Valiant Holding vs. Graubuendner Kantonalbank |
Basler Kantonalbank vs. Banque Cantonale | Basler Kantonalbank vs. St Galler Kantonalbank | Basler Kantonalbank vs. Berner Kantonalbank AG | Basler Kantonalbank vs. Valiant Holding AG |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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