Correlation Between St Galler and Kudelski

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

Diversification Opportunities for St Galler and Kudelski

-0.16

Correlation Coefficient

St Galler  Kudelski

Good diversification

The 3 months correlation between SGKN and Kudelski is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding St Galler Kantonalbank and Kudelski in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kudelski 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 Kudelski. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kudelski has no effect on the direction of St Galler i.e., St Galler and Kudelski go up and down completely randomly.

Pair Corralation between St Galler and Kudelski

Assuming the 90 days trading horizon St Galler Kantonalbank is expected to under-perform the Kudelski. But the stock apears to be less risky and, when comparing its historical volatility, St Galler Kantonalbank is 4.31 times less risky than Kudelski. The stock trades about -0.02 of its potential returns per unit of risk. The Kudelski is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  182.00  in Kudelski on September 25, 2024 and sell it today you would lose (45.00) from holding Kudelski or give up 24.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.76%
Values	Daily Returns

St Galler Kantonalbank  vs.  Kudelski

St Galler Kantonalbank

Risk-Adjusted Performance

7 of 100

OK

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

Kudelski

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kudelski are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, Kudelski 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 St Galler and Kudelski

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

The idea behind St Galler Kantonalbank and Kudelski 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.