Correlation Between Vitec Software and Peab AB
Can any of the company-specific risk be diversified away by investing in both Vitec Software and Peab 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 Peab 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 Peab AB, you can compare the effects of market volatilities on Vitec Software and Peab 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 Peab AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vitec Software and Peab AB.
Diversification Opportunities for Vitec Software and Peab AB
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vitec and Peab is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and Peab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peab 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 Peab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peab AB has no effect on the direction of Vitec Software i.e., Vitec Software and Peab AB go up and down completely randomly.
Pair Corralation between Vitec Software and Peab AB
Assuming the 90 days trading horizon Vitec Software is expected to generate 2.37 times less return on investment than Peab AB. But when comparing it to its historical volatility, Vitec Software Group is 1.02 times less risky than Peab AB. It trades about 0.02 of its potential returns per unit of risk. Peab AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,498 in Peab AB on August 30, 2024 and sell it today you would earn a total of 2,532 from holding Peab AB or generate 46.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vitec Software Group vs. Peab AB
Performance |
| Timeline |
| Vitec Software Group |
| Peab AB |
Vitec Software and Peab AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vitec Software and Peab AB
The main advantage of trading using opposite Vitec Software and Peab AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vitec Software position performs unexpectedly, Peab 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 Peab AB will offset losses from the drop in Peab 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 |
| Peab AB vs. AVTECH Sweden AB | Peab AB vs. OptiCept Technologies AB | Peab AB vs. Lime Technologies AB | Peab AB vs. Maven Wireless Sweden |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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