Correlation Between VP Bank and Swiss Steel
Can any of the company-specific risk be diversified away by investing in both VP Bank and Swiss Steel 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 VP Bank and Swiss Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VP Bank AG and Swiss Steel Holding, you can compare the effects of market volatilities on VP Bank and Swiss Steel 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 VP Bank with a short position of Swiss Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of VP Bank and Swiss Steel.
Diversification Opportunities for VP Bank and Swiss Steel
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between VPBN and Swiss is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding VP Bank AG and Swiss Steel Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Steel Holding and VP Bank 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 VP Bank AG are associated (or correlated) with Swiss Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Steel Holding has no effect on the direction of VP Bank i.e., VP Bank and Swiss Steel go up and down completely randomly.
Pair Corralation between VP Bank and Swiss Steel
Assuming the 90 days trading horizon VP Bank AG is expected to generate 0.33 times more return on investment than Swiss Steel. However, VP Bank AG is 3.0 times less risky than Swiss Steel. It trades about -0.06 of its potential returns per unit of risk. Swiss Steel Holding is currently generating about -0.29 per unit of risk. If you would invest 8,981 in VP Bank AG on September 1, 2024 and sell it today you would lose (1,521) from holding VP Bank AG or give up 16.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
VP Bank AG vs. Swiss Steel Holding
Performance |
| Timeline |
| VP Bank AG |
| Swiss Steel Holding |
VP Bank and Swiss Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VP Bank and Swiss Steel
The main advantage of trading using opposite VP Bank and Swiss Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VP Bank position performs unexpectedly, Swiss Steel 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 Swiss Steel will offset losses from the drop in Swiss Steel's long position.| VP Bank vs. Liechtensteinische Landesbank AG | VP Bank vs. Leonteq AG | VP Bank vs. Helvetia Holding AG | VP Bank vs. Valiant Holding AG |
| Swiss Steel vs. OC Oerlikon Corp | Swiss Steel vs. Meyer Burger Tech | Swiss Steel vs. Evolva Holding SA | Swiss Steel vs. Sulzer AG |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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