Correlation Between Graubuendner Kantonalbank and Carlo Gavazzi

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

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

Diversification Opportunities for Graubuendner Kantonalbank and Carlo Gavazzi

-0.39

Correlation Coefficient

Graubuendner Kantonalbank  Carlo Gavazzi

Very good diversification

The 3 months correlation between Graubuendner and Carlo is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Graubuendner Kantonalbank and Carlo Gavazzi Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlo Gavazzi Holding and Graubuendner 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 Graubuendner Kantonalbank are associated (or correlated) with Carlo Gavazzi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlo Gavazzi Holding has no effect on the direction of Graubuendner Kantonalbank i.e., Graubuendner Kantonalbank and Carlo Gavazzi go up and down completely randomly.

Pair Corralation between Graubuendner Kantonalbank and Carlo Gavazzi

Assuming the 90 days trading horizon Graubuendner Kantonalbank is expected to generate 0.24 times more return on investment than Carlo Gavazzi. However, Graubuendner Kantonalbank is 4.17 times less risky than Carlo Gavazzi. It trades about 0.1 of its potential returns per unit of risk. Carlo Gavazzi Holding is currently generating about -0.12 per unit of risk. If you would invest  169,500  in Graubuendner Kantonalbank on September 20, 2024 and sell it today you would earn a total of  6,500  from holding Graubuendner Kantonalbank or generate 3.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Graubuendner Kantonalbank  vs.  Carlo Gavazzi Holding

Graubuendner Kantonalbank

Risk-Adjusted Performance

7 of 100

Insignificant

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

Carlo Gavazzi Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlo Gavazzi Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Graubuendner Kantonalbank and Carlo Gavazzi

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

The idea behind Graubuendner Kantonalbank and Carlo Gavazzi Holding 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.