Correlation Between Daetwyl I and VAT Group

Can any of the company-specific risk be diversified away by investing in both Daetwyl I and VAT Group 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 Daetwyl I and VAT Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daetwyl I and VAT Group AG, you can compare the effects of market volatilities on Daetwyl I and VAT Group 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 Daetwyl I with a short position of VAT Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daetwyl I and VAT Group.

Diversification Opportunities for Daetwyl I and VAT Group

0.93

Correlation Coefficient

Daetwyl I  VAT Group

Almost no diversification

The 3 months correlation between Daetwyl and VAT is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Daetwyl I and VAT Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VAT Group AG and Daetwyl I 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 Daetwyl I are associated (or correlated) with VAT Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VAT Group AG has no effect on the direction of Daetwyl I i.e., Daetwyl I and VAT Group go up and down completely randomly.

Pair Corralation between Daetwyl I and VAT Group

Assuming the 90 days trading horizon Daetwyl I is expected to under-perform the VAT Group. But the stock apears to be less risky and, when comparing its historical volatility, Daetwyl I is 1.28 times less risky than VAT Group. The stock trades about -0.07 of its potential returns per unit of risk. The VAT Group AG is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  41,000  in VAT Group AG on September 15, 2024 and sell it today you would lose (6,840) from holding VAT Group AG or give up 16.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Daetwyl I  vs.  VAT Group AG

Daetwyl I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daetwyl I has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

VAT Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VAT Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Daetwyl I and VAT Group

The main advantage of trading using opposite Daetwyl I and VAT Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daetwyl I position performs unexpectedly, VAT Group 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 VAT Group will offset losses from the drop in VAT Group's long position.

The idea behind Daetwyl I and VAT Group AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.