Correlation Between VAT Group and Galenica Sante

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

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

Diversification Opportunities for VAT Group and Galenica Sante

-0.69

Correlation Coefficient

VAT Group  Galenica Sante

Excellent diversification

The 3 months correlation between VAT and Galenica is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and Galenica Sante AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galenica Sante AG and VAT Group 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 VAT Group AG are associated (or correlated) with Galenica Sante. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galenica Sante AG has no effect on the direction of VAT Group i.e., VAT Group and Galenica Sante go up and down completely randomly.

Pair Corralation between VAT Group and Galenica Sante

Assuming the 90 days trading horizon VAT Group AG is expected to under-perform the Galenica Sante. In addition to that, VAT Group is 2.37 times more volatile than Galenica Sante AG. It trades about -0.11 of its total potential returns per unit of risk. Galenica Sante AG is currently generating about 0.03 per unit of volatility. If you would invest  7,425  in Galenica Sante AG on September 14, 2024 and sell it today you would earn a total of  85.00  from holding Galenica Sante AG or generate 1.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

VAT Group AG  vs.  Galenica Sante AG

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.

Galenica Sante AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Galenica Sante AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Galenica Sante is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with VAT Group and Galenica Sante

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

The idea behind VAT Group AG and Galenica Sante 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 Transaction History module to view history of all your transactions and understand their impact on performance.