Correlation Between Technology One and Vitura Health
Can any of the company-specific risk be diversified away by investing in both Technology One and Vitura Health 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 Technology One and Vitura Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology One and Vitura Health Limited, you can compare the effects of market volatilities on Technology One and Vitura Health 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 Technology One with a short position of Vitura Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology One and Vitura Health.
Diversification Opportunities for Technology One and Vitura Health
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Technology and Vitura is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Technology One and Vitura Health Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitura Health Limited and Technology One 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 Technology One are associated (or correlated) with Vitura Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitura Health Limited has no effect on the direction of Technology One i.e., Technology One and Vitura Health go up and down completely randomly.
Pair Corralation between Technology One and Vitura Health
Assuming the 90 days trading horizon Technology One is expected to generate 0.42 times more return on investment than Vitura Health. However, Technology One is 2.38 times less risky than Vitura Health. It trades about -0.02 of its potential returns per unit of risk. Vitura Health Limited is currently generating about -0.11 per unit of risk. If you would invest 3,062 in Technology One on November 2, 2024 and sell it today you would lose (17.00) from holding Technology One or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Technology One vs. Vitura Health Limited
Performance |
| Timeline |
| Technology One |
| Vitura Health Limited |
Technology One and Vitura Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology One and Vitura Health
The main advantage of trading using opposite Technology One and Vitura Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology One position performs unexpectedly, Vitura Health 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 Vitura Health will offset losses from the drop in Vitura Health's long position.| Technology One vs. Globe Metals Mining | Technology One vs. Andean Silver Limited | Technology One vs. ARN Media Limited | Technology One vs. Metro Mining |
| Vitura Health vs. Air New Zealand | Vitura Health vs. Insignia Financial | Vitura Health vs. COG Financial Services | Vitura Health vs. Medibank Private |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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