Correlation Between Vitec Software and TF Bank
Can any of the company-specific risk be diversified away by investing in both Vitec Software and TF Bank 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 TF Bank 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 TF Bank AB, you can compare the effects of market volatilities on Vitec Software and TF Bank 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 TF Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vitec Software and TF Bank.
Diversification Opportunities for Vitec Software and TF Bank
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vitec and TFBANK is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and TF Bank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TF Bank 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 TF Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TF Bank AB has no effect on the direction of Vitec Software i.e., Vitec Software and TF Bank go up and down completely randomly.
Pair Corralation between Vitec Software and TF Bank
Assuming the 90 days trading horizon Vitec Software Group is expected to generate 0.69 times more return on investment than TF Bank. However, Vitec Software Group is 1.45 times less risky than TF Bank. It trades about 0.19 of its potential returns per unit of risk. TF Bank AB is currently generating about 0.04 per unit of risk. If you would invest 51,228 in Vitec Software Group on November 3, 2024 and sell it today you would earn a total of 7,272 from holding Vitec Software Group or generate 14.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vitec Software Group vs. TF Bank AB
Performance |
| Timeline |
| Vitec Software Group |
| TF Bank AB |
Vitec Software and TF Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vitec Software and TF Bank
The main advantage of trading using opposite Vitec Software and TF Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vitec Software position performs unexpectedly, TF Bank 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 TF Bank will offset losses from the drop in TF Bank'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 |
| TF Bank vs. Koninklijke Heijmans NV | TF Bank vs. Resurs Holding AB | TF Bank vs. Trelleborg AB | TF Bank vs. Ferronordic 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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