Correlation Between Liechtensteinische and Valiant Holding

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

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

Diversification Opportunities for Liechtensteinische and Valiant Holding

-0.74

Correlation Coefficient

Liechtensteinische  Valiant Holding

Pay attention - limited upside

The 3 months correlation between Liechtensteinische and Valiant is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Liechtensteinische Landesbank and Valiant Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valiant Holding AG and Liechtensteinische 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 Liechtensteinische Landesbank AG are associated (or correlated) with Valiant Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valiant Holding AG has no effect on the direction of Liechtensteinische i.e., Liechtensteinische and Valiant Holding go up and down completely randomly.

Pair Corralation between Liechtensteinische and Valiant Holding

Assuming the 90 days trading horizon Liechtensteinische Landesbank AG is expected to under-perform the Valiant Holding. But the stock apears to be less risky and, when comparing its historical volatility, Liechtensteinische Landesbank AG is 1.21 times less risky than Valiant Holding. The stock trades about -0.1 of its potential returns per unit of risk. The Valiant Holding AG is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  10,100  in Valiant Holding AG on September 26, 2024 and sell it today you would earn a total of  280.00  from holding Valiant Holding AG or generate 2.77% return on investment over 90 days.

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

Liechtensteinische Landesbank   vs.  Valiant Holding AG

Liechtensteinische

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liechtensteinische Landesbank AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Liechtensteinische is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Valiant Holding AG

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Valiant Holding AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Valiant Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Liechtensteinische and Valiant Holding

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

The idea behind Liechtensteinische Landesbank AG and Valiant 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.