Correlation Between St Galler and Liechtensteinische

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

Diversification Opportunities for St Galler and Liechtensteinische

-0.47

Correlation Coefficient

St Galler  Liechtensteinische

Very good diversification

The 3 months correlation between SGKN and Liechtensteinische is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding St Galler Kantonalbank and Liechtensteinische Landesbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liechtensteinische 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 Liechtensteinische. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liechtensteinische has no effect on the direction of St Galler i.e., St Galler and Liechtensteinische go up and down completely randomly.

Pair Corralation between St Galler and Liechtensteinische

Assuming the 90 days trading horizon St Galler Kantonalbank is expected to generate 0.92 times more return on investment than Liechtensteinische. However, St Galler Kantonalbank is 1.09 times less risky than Liechtensteinische. It trades about 0.02 of its potential returns per unit of risk. Liechtensteinische Landesbank AG is currently generating about -0.13 per unit of risk. If you would invest  42,300  in St Galler Kantonalbank on September 2, 2024 and sell it today you would earn a total of  300.00  from holding St Galler Kantonalbank or generate 0.71% return on investment over 90 days.

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

St Galler Kantonalbank  vs.  Liechtensteinische Landesbank

St Galler Kantonalbank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in St Galler Kantonalbank are ranked lower than 1 (%) 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.

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.

Pair Trading with St Galler and Liechtensteinische

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

The idea behind St Galler Kantonalbank and Liechtensteinische Landesbank 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.