Correlation Between Applied Materials and VIAPLAY GROUP

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

By analyzing existing cross correlation between Applied Materials and VIAPLAY GROUP AB, you can compare the effects of market volatilities on Applied Materials and VIAPLAY GROUP 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 Applied Materials with a short position of VIAPLAY GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and VIAPLAY GROUP.

Diversification Opportunities for Applied Materials and VIAPLAY GROUP

0.01

Correlation Coefficient

Applied Materials  VIAPLAY GROUP

Significant diversification

The 3 months correlation between Applied and VIAPLAY is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and VIAPLAY GROUP AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIAPLAY GROUP AB and Applied Materials 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 Applied Materials are associated (or correlated) with VIAPLAY GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIAPLAY GROUP AB has no effect on the direction of Applied Materials i.e., Applied Materials and VIAPLAY GROUP go up and down completely randomly.

Pair Corralation between Applied Materials and VIAPLAY GROUP

Assuming the 90 days horizon Applied Materials is expected to under-perform the VIAPLAY GROUP. But the stock apears to be less risky and, when comparing its historical volatility, Applied Materials is 22.43 times less risky than VIAPLAY GROUP. The stock trades about -0.06 of its potential returns per unit of risk. The VIAPLAY GROUP AB is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  5.87  in VIAPLAY GROUP AB on December 29, 2024 and sell it today you would lose (0.79) from holding VIAPLAY GROUP AB or give up 13.46% of portfolio value over 90 days.

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

Applied Materials  vs.  VIAPLAY GROUP AB

Applied Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

VIAPLAY GROUP AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VIAPLAY GROUP AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, VIAPLAY GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Applied Materials and VIAPLAY GROUP

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

The idea behind Applied Materials and VIAPLAY GROUP 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.