Correlation Between Zuger Kantonalbank and Helvetia Holding

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

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

Diversification Opportunities for Zuger Kantonalbank and Helvetia Holding

-0.57

Correlation Coefficient

Zuger Kantonalbank  Helvetia Holding

Excellent diversification

The 3 months correlation between Zuger and Helvetia is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Zuger Kantonalbank and Helvetia Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helvetia Holding and Zuger Kantonalbank 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 Zuger Kantonalbank are associated (or correlated) with Helvetia Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helvetia Holding has no effect on the direction of Zuger Kantonalbank i.e., Zuger Kantonalbank and Helvetia Holding go up and down completely randomly.

Pair Corralation between Zuger Kantonalbank and Helvetia Holding

Assuming the 90 days trading horizon Zuger Kantonalbank is expected to under-perform the Helvetia Holding. But the stock apears to be less risky and, when comparing its historical volatility, Zuger Kantonalbank is 2.12 times less risky than Helvetia Holding. The stock trades about -0.1 of its potential returns per unit of risk. The Helvetia Holding AG is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  13,650  in Helvetia Holding AG on September 13, 2024 and sell it today you would earn a total of  1,490  from holding Helvetia Holding AG or generate 10.92% return on investment over 90 days.

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

Zuger Kantonalbank  vs.  Helvetia Holding AG

Zuger Kantonalbank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zuger Kantonalbank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Zuger Kantonalbank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Helvetia Holding

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Helvetia Holding AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Helvetia Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zuger Kantonalbank and Helvetia Holding

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

The idea behind Zuger Kantonalbank and Helvetia Holding AG 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.