Correlation Between VAT Group and U Blox
Can any of the company-specific risk be diversified away by investing in both VAT Group and U Blox 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 U Blox 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 U Blox Holding, you can compare the effects of market volatilities on VAT Group and U Blox 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 U Blox. Check out your portfolio center. Please also check ongoing floating volatility patterns of VAT Group and U Blox.
Diversification Opportunities for VAT Group and U Blox
Poor diversification
The 3 months correlation between VAT and UBXN is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and U Blox Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Blox 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 U Blox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Blox Holding has no effect on the direction of VAT Group i.e., VAT Group and U Blox go up and down completely randomly.
Pair Corralation between VAT Group and U Blox
Assuming the 90 days trading horizon VAT Group AG is expected to under-perform the U Blox. But the stock apears to be less risky and, when comparing its historical volatility, VAT Group AG is 1.47 times less risky than U Blox. The stock trades about -0.25 of its potential returns per unit of risk. The U Blox Holding is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 7,780 in U Blox Holding on August 29, 2024 and sell it today you would lose (1,040) from holding U Blox Holding or give up 13.37% 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. U Blox Holding
Performance |
| Timeline |
| VAT Group AG |
| U Blox Holding |
VAT Group and U Blox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VAT Group and U Blox
The main advantage of trading using opposite VAT Group and U Blox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VAT Group position performs unexpectedly, U Blox 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 U Blox will offset losses from the drop in U Blox'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 |
| U Blox vs. Siegfried Holding | U Blox vs. VAT Group AG | U Blox vs. Lonza Group AG | U Blox vs. Straumann 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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