Correlation Between Avanza Bank and Vitec Software
Can any of the company-specific risk be diversified away by investing in both Avanza Bank and Vitec Software 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 Avanza Bank and Vitec Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avanza Bank Holding and Vitec Software Group, you can compare the effects of market volatilities on Avanza Bank and Vitec Software 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 Avanza Bank with a short position of Vitec Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanza Bank and Vitec Software.
Diversification Opportunities for Avanza Bank and Vitec Software
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avanza and Vitec is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Avanza Bank Holding and Vitec Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitec Software Group and Avanza Bank 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 Avanza Bank Holding are associated (or correlated) with Vitec Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitec Software Group has no effect on the direction of Avanza Bank i.e., Avanza Bank and Vitec Software go up and down completely randomly.
Pair Corralation between Avanza Bank and Vitec Software
Assuming the 90 days trading horizon Avanza Bank Holding is expected to under-perform the Vitec Software. But the stock apears to be less risky and, when comparing its historical volatility, Avanza Bank Holding is 1.77 times less risky than Vitec Software. The stock trades about -0.11 of its potential returns per unit of risk. The Vitec Software Group is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 48,720 in Vitec Software Group on August 29, 2024 and sell it today you would lose (1,140) from holding Vitec Software Group or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avanza Bank Holding vs. Vitec Software Group
Performance |
| Timeline |
| Avanza Bank Holding |
| Vitec Software Group |
Avanza Bank and Vitec Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avanza Bank and Vitec Software
The main advantage of trading using opposite Avanza Bank and Vitec Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanza Bank position performs unexpectedly, Vitec Software 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 Vitec Software will offset losses from the drop in Vitec Software's long position.| Avanza Bank vs. Axfood AB | Avanza Bank vs. Samhllsbyggnadsbolaget i Norden | Avanza Bank vs. Castellum AB | Avanza Bank vs. Investor AB ser |
| Vitec Software vs. Lifco AB | Vitec Software vs. Lagercrantz Group AB | Vitec Software vs. Addtech AB | Vitec Software vs. Instalco Intressenter AB |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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