Correlation Between VAT Group and Lem Holding
Can any of the company-specific risk be diversified away by investing in both VAT Group and Lem 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 Lem 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 Lem Holding SA, you can compare the effects of market volatilities on VAT Group and Lem 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 Lem Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of VAT Group and Lem Holding.
Diversification Opportunities for VAT Group and Lem Holding
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VAT and Lem is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and Lem Holding SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lem Holding SA 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 Lem Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lem Holding SA has no effect on the direction of VAT Group i.e., VAT Group and Lem Holding go up and down completely randomly.
Pair Corralation between VAT Group and Lem Holding
Assuming the 90 days trading horizon VAT Group AG is expected to generate 0.3 times more return on investment than Lem Holding. However, VAT Group AG is 3.39 times less risky than Lem Holding. It trades about -0.16 of its potential returns per unit of risk. Lem Holding SA is currently generating about -0.31 per unit of risk. If you would invest 36,900 in VAT Group AG on August 29, 2024 and sell it today you would lose (2,180) from holding VAT Group AG or give up 5.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VAT Group AG vs. Lem Holding SA
Performance |
| Timeline |
| VAT Group AG |
| Lem Holding SA |
VAT Group and Lem Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VAT Group and Lem Holding
The main advantage of trading using opposite VAT Group and Lem Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VAT Group position performs unexpectedly, Lem 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 Lem Holding will offset losses from the drop in Lem Holding's long position.| VAT Group vs. Sika AG | VAT Group vs. Straumann Holding AG | VAT Group vs. Geberit AG | VAT Group vs. Partners Group Holding |
| Lem Holding vs. Inficon Holding | Lem Holding vs. Belimo Holding | Lem Holding vs. Interroll Holding AG | Lem Holding vs. Comet Holding AG |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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