Correlation Between VAT Group and Gurit Holding

Can any of the company-specific risk be diversified away by investing in both VAT Group and Gurit Holding 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 Gurit Holding 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 Gurit Holding AG, you can compare the effects of market volatilities on VAT Group and Gurit Holding 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 Gurit Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of VAT Group and Gurit Holding.

Diversification Opportunities for VAT Group and Gurit Holding

0.85

Correlation Coefficient

VAT Group  Gurit Holding

Very poor diversification

The 3 months correlation between VAT and Gurit is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and Gurit Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gurit Holding 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 Gurit Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gurit Holding AG has no effect on the direction of VAT Group i.e., VAT Group and Gurit Holding go up and down completely randomly.

Pair Corralation between VAT Group and Gurit Holding

Assuming the 90 days trading horizon VAT Group AG is expected to generate 0.44 times more return on investment than Gurit Holding. However, VAT Group AG is 2.29 times less risky than Gurit Holding. It trades about -0.16 of its potential returns per unit of risk. Gurit Holding AG is currently generating about -0.32 per unit of risk. If you would invest  44,050  in VAT Group AG on August 31, 2024 and sell it today you would lose (9,190) from holding VAT Group AG or give up 20.86% of portfolio value over 90 days.

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

VAT Group AG  vs.  Gurit Holding 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 December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Gurit Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gurit Holding 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 December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with VAT Group and Gurit Holding

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

The idea behind VAT Group AG and Gurit Holding 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.