Correlation Between Vitec Software and Biotage AB
Can any of the company-specific risk be diversified away by investing in both Vitec Software and Biotage AB 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 Biotage AB 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 Biotage AB, you can compare the effects of market volatilities on Vitec Software and Biotage AB 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 Biotage AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vitec Software and Biotage AB.
Diversification Opportunities for Vitec Software and Biotage AB
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vitec and Biotage is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and Biotage AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotage 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 Biotage AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotage AB has no effect on the direction of Vitec Software i.e., Vitec Software and Biotage AB go up and down completely randomly.
Pair Corralation between Vitec Software and Biotage AB
Assuming the 90 days trading horizon Vitec Software Group is expected to generate 0.95 times more return on investment than Biotage AB. However, Vitec Software Group is 1.05 times less risky than Biotage AB. It trades about 0.0 of its potential returns per unit of risk. Biotage AB is currently generating about -0.06 per unit of risk. If you would invest 46,680 in Vitec Software Group on August 25, 2024 and sell it today you would lose (140.00) from holding Vitec Software Group or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vitec Software Group vs. Biotage AB
Performance |
| Timeline |
| Vitec Software Group |
| Biotage AB |
Vitec Software and Biotage AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vitec Software and Biotage AB
The main advantage of trading using opposite Vitec Software and Biotage AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vitec Software position performs unexpectedly, Biotage AB 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 Biotage AB will offset losses from the drop in Biotage AB'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 |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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