Correlation Between Miton UK and St Galler

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

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

Diversification Opportunities for Miton UK and St Galler

-0.55

Correlation Coefficient

Miton UK  St Galler

Excellent diversification

The 3 months correlation between Miton and 0QQZ is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Miton UK MicroCap and St Galler Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Galler Kantonalbank and Miton UK 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 Miton UK MicroCap are associated (or correlated) with St Galler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Galler Kantonalbank has no effect on the direction of Miton UK i.e., Miton UK and St Galler go up and down completely randomly.

Pair Corralation between Miton UK and St Galler

Assuming the 90 days trading horizon Miton UK is expected to generate 1.83 times less return on investment than St Galler. But when comparing it to its historical volatility, Miton UK MicroCap is 1.74 times less risky than St Galler. It trades about 0.12 of its potential returns per unit of risk. St Galler Kantonalbank is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  42,200  in St Galler Kantonalbank on September 18, 2024 and sell it today you would earn a total of  850.00  from holding St Galler Kantonalbank or generate 2.01% return on investment over 90 days.

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

Miton UK MicroCap  vs.  St Galler Kantonalbank

Miton UK MicroCap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Miton UK MicroCap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 comparatively stable basic indicators, St Galler is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Miton UK and St Galler

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

The idea behind Miton UK MicroCap and St Galler Kantonalbank 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.