Correlation Between Vitec Software and Beijer Ref
Can any of the company-specific risk be diversified away by investing in both Vitec Software and Beijer Ref 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 Vitec Software and Beijer Ref into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vitec Software Group and Beijer Ref AB, you can compare the effects of market volatilities on Vitec Software and Beijer Ref 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 Vitec Software with a short position of Beijer Ref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vitec Software and Beijer Ref.
Diversification Opportunities for Vitec Software and Beijer Ref
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vitec and Beijer is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and Beijer Ref AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijer Ref AB and Vitec Software 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 Vitec Software Group are associated (or correlated) with Beijer Ref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijer Ref AB has no effect on the direction of Vitec Software i.e., Vitec Software and Beijer Ref go up and down completely randomly.
Pair Corralation between Vitec Software and Beijer Ref
Assuming the 90 days trading horizon Vitec Software Group is expected to under-perform the Beijer Ref. But the stock apears to be less risky and, when comparing its historical volatility, Vitec Software Group is 1.13 times less risky than Beijer Ref. The stock trades about -0.09 of its potential returns per unit of risk. The Beijer Ref AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 16,190 in Beijer Ref AB on August 29, 2024 and sell it today you would lose (20.00) from holding Beijer Ref AB or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vitec Software Group vs. Beijer Ref AB
Performance |
| Timeline |
| Vitec Software Group |
| Beijer Ref AB |
Vitec Software and Beijer Ref Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vitec Software and Beijer Ref
The main advantage of trading using opposite Vitec Software and Beijer Ref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vitec Software position performs unexpectedly, Beijer Ref 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 Beijer Ref will offset losses from the drop in Beijer Ref's long position.| Vitec Software vs. Lifco AB | Vitec Software vs. Lagercrantz Group AB | Vitec Software vs. Addtech AB | Vitec Software vs. Instalco Intressenter AB |
| Beijer Ref vs. Addtech AB | Beijer Ref vs. Indutrade AB | Beijer Ref vs. Lifco AB | Beijer Ref vs. NIBE Industrier AB |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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