Correlation Between COVIVIO HOTELS and VIB Vermgen

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

By analyzing existing cross correlation between COVIVIO HOTELS INH and VIB Vermgen AG, you can compare the effects of market volatilities on COVIVIO HOTELS and VIB Vermgen 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 COVIVIO HOTELS with a short position of VIB Vermgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of COVIVIO HOTELS and VIB Vermgen.

Diversification Opportunities for COVIVIO HOTELS and VIB Vermgen

-0.23

Correlation Coefficient

COVIVIO HOTELS  VIB Vermgen

Very good diversification

The 3 months correlation between COVIVIO and VIB is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding COVIVIO HOTELS INH and VIB Vermgen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIB Vermgen AG and COVIVIO HOTELS 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 COVIVIO HOTELS INH are associated (or correlated) with VIB Vermgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIB Vermgen AG has no effect on the direction of COVIVIO HOTELS i.e., COVIVIO HOTELS and VIB Vermgen go up and down completely randomly.

Pair Corralation between COVIVIO HOTELS and VIB Vermgen

Assuming the 90 days horizon COVIVIO HOTELS INH is expected to generate 1.2 times more return on investment than VIB Vermgen. However, COVIVIO HOTELS is 1.2 times more volatile than VIB Vermgen AG. It trades about 0.06 of its potential returns per unit of risk. VIB Vermgen AG is currently generating about -0.23 per unit of risk. If you would invest  2,040  in COVIVIO HOTELS INH on December 2, 2024 and sell it today you would earn a total of  70.00  from holding COVIVIO HOTELS INH or generate 3.43% return on investment over 90 days.

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

COVIVIO HOTELS INH  vs.  VIB Vermgen AG

COVIVIO HOTELS INH

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COVIVIO HOTELS INH are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COVIVIO HOTELS reported solid returns over the last few months and may actually be approaching a breakup point.

VIB Vermgen AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days VIB Vermgen AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with COVIVIO HOTELS and VIB Vermgen

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

The idea behind COVIVIO HOTELS INH and VIB Vermgen 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.