Correlation Between Lem Holding and VAT Group
Can any of the company-specific risk be diversified away by investing in both Lem Holding and VAT Group 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 Lem Holding and VAT Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lem Holding SA and VAT Group AG, you can compare the effects of market volatilities on Lem Holding and VAT Group 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 Lem Holding with a short position of VAT Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lem Holding and VAT Group.
Diversification Opportunities for Lem Holding and VAT Group
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lem and VAT is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Lem Holding SA and VAT Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VAT Group AG and Lem Holding 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 Lem Holding SA are associated (or correlated) with VAT Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VAT Group AG has no effect on the direction of Lem Holding i.e., Lem Holding and VAT Group go up and down completely randomly.
Pair Corralation between Lem Holding and VAT Group
Assuming the 90 days trading horizon Lem Holding SA is expected to under-perform the VAT Group. In addition to that, Lem Holding is 3.49 times more volatile than VAT Group AG. It trades about -0.3 of its total potential returns per unit of risk. VAT Group AG is currently generating about -0.06 per unit of volatility. If you would invest 35,950 in VAT Group AG on September 1, 2024 and sell it today you would lose (810.00) from holding VAT Group AG or give up 2.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lem Holding SA vs. VAT Group AG
Performance |
| Timeline |
| Lem Holding SA |
| VAT Group AG |
Lem Holding and VAT Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lem Holding and VAT Group
The main advantage of trading using opposite Lem Holding and VAT Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lem Holding position performs unexpectedly, VAT Group 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 VAT Group will offset losses from the drop in VAT Group's long position.| Lem Holding vs. Inficon Holding | Lem Holding vs. Belimo Holding | Lem Holding vs. Interroll Holding AG | Lem Holding vs. Comet Holding AG |
| VAT Group vs. Sika AG | VAT Group vs. Straumann Holding AG | VAT Group vs. Geberit AG | VAT Group vs. Partners Group Holding |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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