Correlation Between Vitec Software and Lindab International
Can any of the company-specific risk be diversified away by investing in both Vitec Software and Lindab International 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 Lindab International 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 Lindab International AB, you can compare the effects of market volatilities on Vitec Software and Lindab International 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 Lindab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vitec Software and Lindab International.
Diversification Opportunities for Vitec Software and Lindab International
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vitec and Lindab is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and Lindab International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindab International 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 Lindab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindab International has no effect on the direction of Vitec Software i.e., Vitec Software and Lindab International go up and down completely randomly.
Pair Corralation between Vitec Software and Lindab International
Assuming the 90 days trading horizon Vitec Software Group is expected to under-perform the Lindab International. But the stock apears to be less risky and, when comparing its historical volatility, Vitec Software Group is 1.0 times less risky than Lindab International. The stock trades about -0.03 of its potential returns per unit of risk. The Lindab International AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 21,116 in Lindab International AB on August 25, 2024 and sell it today you would earn a total of 2,184 from holding Lindab International AB or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vitec Software Group vs. Lindab International AB
Performance |
| Timeline |
| Vitec Software Group |
| Lindab International |
Vitec Software and Lindab International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vitec Software and Lindab International
The main advantage of trading using opposite Vitec Software and Lindab International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vitec Software position performs unexpectedly, Lindab International 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 Lindab International will offset losses from the drop in Lindab International'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 |
| Lindab International vs. Addtech AB | Lindab International vs. Teqnion AB | Lindab International vs. Vitec Software Group | Lindab International vs. Lagercrantz Group 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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