Correlation Between Danaher and VITEC SOFTWARE

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

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

Diversification Opportunities for Danaher and VITEC SOFTWARE

-0.58

Correlation Coefficient

Danaher  VITEC SOFTWARE

Excellent diversification

The 3 months correlation between Danaher and VITEC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Danaher 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 Danaher 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 Danaher 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 Danaher i.e., Danaher and VITEC SOFTWARE go up and down completely randomly.

Pair Corralation between Danaher and VITEC SOFTWARE

Assuming the 90 days horizon Danaher is expected to generate 4.01 times less return on investment than VITEC SOFTWARE. In addition to that, Danaher is 1.7 times more volatile than VITEC SOFTWARE GROUP. It trades about 0.01 of its total potential returns per unit of risk. VITEC SOFTWARE GROUP is currently generating about 0.1 per unit of volatility. If you would invest  4,580  in VITEC SOFTWARE GROUP on December 20, 2024 and sell it today you would earn a total of  540.00  from holding VITEC SOFTWARE GROUP or generate 11.79% return on investment over 90 days.

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

Danaher  vs.  VITEC SOFTWARE GROUP

Danaher

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Danaher are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Danaher is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

VITEC SOFTWARE GROUP

Risk-Adjusted Performance

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 fragile basic indicators, VITEC SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Danaher and VITEC SOFTWARE

The main advantage of trading using opposite Danaher and VITEC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaher 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 Danaher 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..