Correlation Between VAT Group and Straumann Holding
Can any of the company-specific risk be diversified away by investing in both VAT Group and Straumann 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 Straumann 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 Straumann Holding AG, you can compare the effects of market volatilities on VAT Group and Straumann 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 Straumann Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of VAT Group and Straumann Holding.
Diversification Opportunities for VAT Group and Straumann Holding
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VAT and Straumann is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and Straumann Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Straumann Holding 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 Straumann Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Straumann Holding has no effect on the direction of VAT Group i.e., VAT Group and Straumann Holding go up and down completely randomly.
Pair Corralation between VAT Group and Straumann Holding
Assuming the 90 days trading horizon VAT Group AG is expected to generate 0.68 times more return on investment than Straumann Holding. However, VAT Group AG is 1.48 times less risky than Straumann Holding. It trades about -0.14 of its potential returns per unit of risk. Straumann Holding AG is currently generating about -0.24 per unit of risk. If you would invest 36,900 in VAT Group AG on August 28, 2024 and sell it today you would lose (1,820) from holding VAT Group AG or give up 4.93% 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. Straumann Holding AG
Performance |
| Timeline |
| VAT Group AG |
| Straumann Holding |
VAT Group and Straumann Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VAT Group and Straumann Holding
The main advantage of trading using opposite VAT Group and Straumann Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VAT Group position performs unexpectedly, Straumann 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 Straumann Holding will offset losses from the drop in Straumann 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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