Correlation Between Vitec Software and Swedencare Publ

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

By analyzing existing cross correlation between Vitec Software Group and Swedencare publ AB, you can compare the effects of market volatilities on Vitec Software and Swedencare Publ 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 Vitec Software with a short position of Swedencare Publ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vitec Software and Swedencare Publ.

Diversification Opportunities for Vitec Software and Swedencare Publ

0.27

Correlation Coefficient

Vitec Software  Swedencare Publ

Modest diversification

The 3 months correlation between Vitec and Swedencare is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and Swedencare publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedencare publ AB and Vitec Software 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 Vitec Software Group are associated (or correlated) with Swedencare Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedencare publ AB has no effect on the direction of Vitec Software i.e., Vitec Software and Swedencare Publ go up and down completely randomly.

Pair Corralation between Vitec Software and Swedencare Publ

Assuming the 90 days trading horizon Vitec Software is expected to generate 2.31 times less return on investment than Swedencare Publ. In addition to that, Vitec Software is 1.13 times more volatile than Swedencare publ AB. It trades about 0.03 of its total potential returns per unit of risk. Swedencare publ AB is currently generating about 0.08 per unit of volatility. If you would invest  4,624  in Swedencare publ AB on September 15, 2024 and sell it today you would earn a total of  451.00  from holding Swedencare publ AB or generate 9.75% return on investment over 90 days.

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

Vitec Software Group  vs.  Swedencare publ AB

Vitec Software Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vitec Software Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vitec Software is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Swedencare publ AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Swedencare publ AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Swedencare Publ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vitec Software and Swedencare Publ

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

The idea behind Vitec Software Group and Swedencare publ AB 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.