Correlation Between Banque Cantonale and St Galler

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

Diversification Opportunities for Banque Cantonale and St Galler

0.51

Correlation Coefficient

Banque Cantonale  St Galler

Very weak diversification

The 3 months correlation between Banque and SGKN is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Banque Cantonale du 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 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 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 Banque Cantonale i.e., Banque Cantonale and St Galler go up and down completely randomly.

Pair Corralation between Banque Cantonale and St Galler

Assuming the 90 days trading horizon Banque Cantonale is expected to generate 1.32 times less return on investment than St Galler. In addition to that, Banque Cantonale is 1.01 times more volatile than St Galler Kantonalbank. It trades about 0.19 of its total potential returns per unit of risk. St Galler Kantonalbank is currently generating about 0.25 per unit of volatility. 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	Weak
Accuracy	100.0%
Values	Daily Returns

Banque Cantonale du  vs.  St Galler Kantonalbank

Banque Cantonale

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banque Cantonale du are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Banque Cantonale 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 Banque Cantonale and St Galler

The main advantage of trading using opposite Banque Cantonale and St Galler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banque Cantonale 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 Banque Cantonale du 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.