Correlation Between Vitec Software and METALL ZUG

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

Diversification Opportunities for Vitec Software and METALL ZUG

-0.4

Correlation Coefficient

Vitec Software  METALL ZUG

Very good diversification

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

Pair Corralation between Vitec Software and METALL ZUG

Assuming the 90 days trading horizon Vitec Software Group is expected to generate 1.77 times more return on investment than METALL ZUG. However, Vitec Software is 1.77 times more volatile than METALL ZUG AG. It trades about 0.03 of its potential returns per unit of risk. METALL ZUG AG is currently generating about -0.1 per unit of risk. If you would invest  41,159  in Vitec Software Group on October 10, 2024 and sell it today you would earn a total of  9,839  from holding Vitec Software Group or generate 23.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.25%
Values	Daily Returns

Vitec Software Group  vs.  METALL ZUG AG

Vitec Software Group

Risk-Adjusted Performance

2 of 100

Modest

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

METALL ZUG AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METALL ZUG AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Vitec Software and METALL ZUG

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

The idea behind Vitec Software Group and METALL ZUG 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.