Correlation Between VITEC SOFTWARE and RWE AG

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

Diversification Opportunities for VITEC SOFTWARE and RWE AG

0.0

Correlation Coefficient

VITEC SOFTWARE  RWE AG

Pay attention - limited upside

The 3 months correlation between VITEC and RWE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VITEC SOFTWARE GROUP and RWE AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RWE 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 RWE AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RWE AG has no effect on the direction of VITEC SOFTWARE i.e., VITEC SOFTWARE and RWE AG go up and down completely randomly.

Pair Corralation between VITEC SOFTWARE and RWE AG

If you would invest  4,775  in VITEC SOFTWARE GROUP on October 9, 2024 and sell it today you would earn a total of  95.00  from holding VITEC SOFTWARE GROUP or generate 1.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.4%
Values	Daily Returns

VITEC SOFTWARE GROUP  vs.  RWE AG

VITEC SOFTWARE GROUP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VITEC SOFTWARE GROUP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, VITEC SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

RWE AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RWE AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, RWE AG is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VITEC SOFTWARE and RWE AG

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

The idea behind VITEC SOFTWARE GROUP and RWE 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.