Correlation Between Jenoptik and Virtus Investment

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

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

Diversification Opportunities for Jenoptik and Virtus Investment

-0.87

Correlation Coefficient

Jenoptik  Virtus Investment

Pay attention - limited upside

The 3 months correlation between Jenoptik and Virtus is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Jenoptik AG and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment and Jenoptik 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 Jenoptik AG are associated (or correlated) with Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Jenoptik i.e., Jenoptik and Virtus Investment go up and down completely randomly.

Pair Corralation between Jenoptik and Virtus Investment

Assuming the 90 days trading horizon Jenoptik AG is expected to under-perform the Virtus Investment. But the stock apears to be less risky and, when comparing its historical volatility, Jenoptik AG is 1.34 times less risky than Virtus Investment. The stock trades about -0.11 of its potential returns per unit of risk. The Virtus Investment Partners is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  20,177  in Virtus Investment Partners on September 17, 2024 and sell it today you would earn a total of  2,823  from holding Virtus Investment Partners or generate 13.99% return on investment over 90 days.

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

Jenoptik AG  vs.  Virtus Investment Partners

Jenoptik AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Virtus Investment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Virtus Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jenoptik and Virtus Investment

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

The idea behind Jenoptik AG and Virtus Investment Partners 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.