Correlation Between Valiant Holding and St Galler

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

Diversification Opportunities for Valiant Holding and St Galler

0.98

Correlation Coefficient

Valiant Holding  St Galler

Almost no diversification

The 3 months correlation between Valiant and SGKN is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Valiant Holding AG and St Galler Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Galler 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 St Galler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Galler Kantonalbank has no effect on the direction of Valiant Holding i.e., Valiant Holding and St Galler go up and down completely randomly.

Pair Corralation between Valiant Holding and St Galler

Assuming the 90 days trading horizon Valiant Holding AG is expected to generate 1.48 times more return on investment than St Galler. However, Valiant Holding is 1.48 times more volatile than St Galler Kantonalbank. It trades about 0.2 of its potential returns per unit of risk. St Galler Kantonalbank is currently generating about 0.25 per unit of risk. If you would invest  10,560  in Valiant Holding AG on December 30, 2024 and sell it today you would earn a total of  1,340  from holding Valiant Holding AG or generate 12.69% return on investment over 90 days.

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

Valiant Holding AG  vs.  St Galler Kantonalbank

Valiant Holding AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Valiant Holding AG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Valiant Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with Valiant Holding and St Galler

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

The idea behind Valiant Holding AG and St Galler 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.