Correlation Between St Galler and Monks Investment

Can any of the company-specific risk be diversified away by investing in both St Galler and Monks Investment 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 St Galler and Monks Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between St Galler Kantonalbank and Monks Investment Trust, you can compare the effects of market volatilities on St Galler and Monks Investment 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 St Galler with a short position of Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of St Galler and Monks Investment.

Diversification Opportunities for St Galler and Monks Investment

0.46

Correlation Coefficient

St Galler  Monks Investment

Very weak diversification

The 3 months correlation between 0QQZ and Monks is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding St Galler Kantonalbank and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks Investment Trust and St Galler 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 St Galler Kantonalbank are associated (or correlated) with Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of St Galler i.e., St Galler and Monks Investment go up and down completely randomly.

Pair Corralation between St Galler and Monks Investment

Assuming the 90 days trading horizon St Galler Kantonalbank is expected to under-perform the Monks Investment. But the stock apears to be less risky and, when comparing its historical volatility, St Galler Kantonalbank is 1.53 times less risky than Monks Investment. The stock trades about -0.07 of its potential returns per unit of risk. The Monks Investment Trust is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  119,000  in Monks Investment Trust on August 30, 2024 and sell it today you would earn a total of  8,400  from holding Monks Investment Trust or generate 7.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

St Galler Kantonalbank  vs.  Monks Investment Trust

St Galler Kantonalbank

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in St Galler Kantonalbank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, St Galler is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Monks Investment Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Monks Investment may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with St Galler and Monks Investment

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

The idea behind St Galler Kantonalbank and Monks Investment Trust 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.