Correlation Between VAT Group and Bachem Holding
Can any of the company-specific risk be diversified away by investing in both VAT Group and Bachem Holding 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 VAT Group and Bachem Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VAT Group AG and Bachem Holding AG, you can compare the effects of market volatilities on VAT Group and Bachem Holding 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 VAT Group with a short position of Bachem Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of VAT Group and Bachem Holding.
Diversification Opportunities for VAT Group and Bachem Holding
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between VAT and Bachem is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and Bachem Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bachem Holding AG and VAT Group 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 VAT Group AG are associated (or correlated) with Bachem Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bachem Holding AG has no effect on the direction of VAT Group i.e., VAT Group and Bachem Holding go up and down completely randomly.
Pair Corralation between VAT Group and Bachem Holding
Assuming the 90 days trading horizon VAT Group AG is expected to under-perform the Bachem Holding. But the stock apears to be less risky and, when comparing its historical volatility, VAT Group AG is 1.56 times less risky than Bachem Holding. The stock trades about -0.17 of its potential returns per unit of risk. The Bachem Holding AG is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 7,135 in Bachem Holding AG on August 29, 2024 and sell it today you would lose (395.00) from holding Bachem Holding AG or give up 5.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VAT Group AG vs. Bachem Holding AG
Performance |
| Timeline |
| VAT Group AG |
| Bachem Holding AG |
VAT Group and Bachem Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VAT Group and Bachem Holding
The main advantage of trading using opposite VAT Group and Bachem Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VAT Group position performs unexpectedly, Bachem Holding 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 Bachem Holding will offset losses from the drop in Bachem Holding's long position.| VAT Group vs. Interroll Holding AG | VAT Group vs. Comet Holding AG | VAT Group vs. Bossard Holding AG | VAT Group vs. Komax Holding AG |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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