Correlation Between Banque Cantonale and Basler Kantonalbank

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

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

Diversification Opportunities for Banque Cantonale and Basler Kantonalbank

0.8

Correlation Coefficient

Banque Cantonale  Basler Kantonalbank

Very poor diversification

The 3 months correlation between Banque and Basler is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Banque Cantonale du and Basler Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basler Kantonalbank and Banque Cantonale 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 Banque Cantonale du 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 Banque Cantonale i.e., Banque Cantonale and Basler Kantonalbank go up and down completely randomly.

Pair Corralation between Banque Cantonale and Basler Kantonalbank

Assuming the 90 days trading horizon Banque Cantonale is expected to generate 3.64 times less return on investment than Basler Kantonalbank. But when comparing it to its historical volatility, Banque Cantonale du is 1.44 times less risky than Basler Kantonalbank. It trades about 0.1 of its potential returns per unit of risk. Basler Kantonalbank is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  6,780  in Basler Kantonalbank on December 1, 2024 and sell it today you would earn a total of  1,080  from holding Basler Kantonalbank or generate 15.93% return on investment over 90 days.

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

Banque Cantonale du  vs.  Basler Kantonalbank

Banque Cantonale

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Banque Cantonale du are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Banque Cantonale is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Basler Kantonalbank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Basler Kantonalbank are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Basler Kantonalbank showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banque Cantonale and Basler Kantonalbank

The main advantage of trading using opposite Banque Cantonale and Basler Kantonalbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banque Cantonale 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.

The idea behind Banque Cantonale du and Basler 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.