Correlation Between Idorsia and VAT Group

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

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

Diversification Opportunities for Idorsia and VAT Group

0.23

Correlation Coefficient

Idorsia  VAT Group

Modest diversification

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

Pair Corralation between Idorsia and VAT Group

Assuming the 90 days trading horizon Idorsia is expected to generate 5.07 times more return on investment than VAT Group. However, Idorsia is 5.07 times more volatile than VAT Group AG. It trades about 0.08 of its potential returns per unit of risk. VAT Group AG is currently generating about 0.01 per unit of risk. If you would invest  84.00  in Idorsia on November 28, 2024 and sell it today you would earn a total of  8.00  from holding Idorsia or generate 9.52% return on investment over 90 days.

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

Idorsia  vs.  VAT Group AG

Idorsia

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Idorsia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Idorsia showed solid returns over the last few months and may actually be approaching a breakup point.

VAT Group AG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VAT Group AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, VAT Group is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Idorsia and VAT Group

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

The idea behind Idorsia and VAT Group 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.