Correlation Between I Tech and Vitec Software
Can any of the company-specific risk be diversified away by investing in both I Tech 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 I Tech and Vitec Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between I Tech and Vitec Software Group, you can compare the effects of market volatilities on I Tech 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 I Tech with a short position of Vitec Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Tech and Vitec Software.
Diversification Opportunities for I Tech and Vitec Software
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ITECH and Vitec is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding I Tech 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 I Tech 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 I Tech 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 I Tech i.e., I Tech and Vitec Software go up and down completely randomly.
Pair Corralation between I Tech and Vitec Software
Assuming the 90 days trading horizon I Tech is expected to under-perform the Vitec Software. In addition to that, I Tech is 1.21 times more volatile than Vitec Software Group. It trades about -0.12 of its total potential returns per unit of risk. Vitec Software Group is currently generating about -0.1 per unit of volatility. If you would invest 48,720 in Vitec Software Group on August 27, 2024 and sell it today you would lose (2,180) from holding Vitec Software Group or give up 4.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
I Tech vs. Vitec Software Group
Performance |
| Timeline |
| I Tech |
| Vitec Software Group |
I Tech and Vitec Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with I Tech and Vitec Software
The main advantage of trading using opposite I Tech and Vitec Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I Tech 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.The idea behind I Tech and Vitec Software Group 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.| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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