Correlation Between Siegfried Holding and VAT Group

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

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

Diversification Opportunities for Siegfried Holding and VAT Group

0.36

Correlation Coefficient

Siegfried Holding  VAT Group

Weak diversification

The 3 months correlation between Siegfried and VAT is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Siegfried Holding 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 Siegfried Holding 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 Siegfried Holding 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 Siegfried Holding i.e., Siegfried Holding and VAT Group go up and down completely randomly.

Pair Corralation between Siegfried Holding and VAT Group

Assuming the 90 days trading horizon Siegfried Holding is expected to under-perform the VAT Group. But the stock apears to be less risky and, when comparing its historical volatility, Siegfried Holding is 1.42 times less risky than VAT Group. The stock trades about -0.05 of its potential returns per unit of risk. The VAT Group AG is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  34,180  in VAT Group AG on November 19, 2024 and sell it today you would earn a total of  1,500  from holding VAT Group AG or generate 4.39% return on investment over 90 days.

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

Siegfried Holding  vs.  VAT Group AG

Siegfried Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siegfried Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Siegfried Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

VAT Group AG

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VAT Group AG are ranked lower than 3 (%) 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 Siegfried Holding and VAT Group

The main advantage of trading using opposite Siegfried Holding and VAT Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siegfried Holding 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 Siegfried Holding 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..