Correlation Between Atresmedia and Vitec Software

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

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

Diversification Opportunities for Atresmedia and Vitec Software

0.15

Correlation Coefficient

Atresmedia  Vitec Software

Average diversification

The 3 months correlation between Atresmedia and Vitec is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Atresmedia and Vitec Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitec Software Group and Atresmedia 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 Atresmedia are associated (or correlated) with Vitec Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitec Software Group has no effect on the direction of Atresmedia i.e., Atresmedia and Vitec Software go up and down completely randomly.

Pair Corralation between Atresmedia and Vitec Software

Assuming the 90 days trading horizon Atresmedia is expected to under-perform the Vitec Software. In addition to that, Atresmedia is 1.18 times more volatile than Vitec Software Group. It trades about -0.03 of its total potential returns per unit of risk. Vitec Software Group is currently generating about 0.29 per unit of volatility. If you would invest  51,350  in Vitec Software Group on October 8, 2024 and sell it today you would earn a total of  3,550  from holding Vitec Software Group or generate 6.91% return on investment over 90 days.

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

Atresmedia  vs.  Vitec Software Group

Atresmedia

Risk-Adjusted Performance

2 of 100

Weak

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

Vitec Software Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vitec Software Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vitec Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Atresmedia and Vitec Software

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

The idea behind Atresmedia and Vitec Software Group 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..