Correlation Between Industria and Vytrus Biotech

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

By analyzing existing cross correlation between Industria de Diseno and Vytrus Biotech SA, you can compare the effects of market volatilities on Industria and Vytrus Biotech 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 Industria with a short position of Vytrus Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industria and Vytrus Biotech.

Diversification Opportunities for Industria and Vytrus Biotech

-0.4

Correlation Coefficient

Industria  Vytrus Biotech

Very good diversification

The 3 months correlation between Industria and Vytrus is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseno and Vytrus Biotech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vytrus Biotech SA and Industria 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 Industria de Diseno are associated (or correlated) with Vytrus Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vytrus Biotech SA has no effect on the direction of Industria i.e., Industria and Vytrus Biotech go up and down completely randomly.

Pair Corralation between Industria and Vytrus Biotech

Assuming the 90 days trading horizon Industria de Diseno is expected to generate 0.34 times more return on investment than Vytrus Biotech. However, Industria de Diseno is 2.91 times less risky than Vytrus Biotech. It trades about 0.03 of its potential returns per unit of risk. Vytrus Biotech SA is currently generating about -0.12 per unit of risk. If you would invest  4,991  in Industria de Diseno on September 13, 2024 and sell it today you would earn a total of  121.00  from holding Industria de Diseno or generate 2.42% return on investment over 90 days.

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

Industria de Diseno  vs.  Vytrus Biotech SA

Industria de Diseno

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Industria de Diseno are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Industria is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Vytrus Biotech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vytrus Biotech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Industria and Vytrus Biotech

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

The idea behind Industria de Diseno and Vytrus Biotech SA 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.