Correlation Between Sparinvest INDEX and ViroGates

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

By analyzing existing cross correlation between Sparinvest INDEX Globale and ViroGates AS, you can compare the effects of market volatilities on Sparinvest INDEX and ViroGates 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 Sparinvest INDEX with a short position of ViroGates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparinvest INDEX and ViroGates.

Diversification Opportunities for Sparinvest INDEX and ViroGates

0.75

Correlation Coefficient

Sparinvest INDEX  ViroGates

Poor diversification

The 3 months correlation between Sparinvest and ViroGates is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sparinvest INDEX Globale and ViroGates AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ViroGates AS and Sparinvest INDEX 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 Sparinvest INDEX Globale are associated (or correlated) with ViroGates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ViroGates AS has no effect on the direction of Sparinvest INDEX i.e., Sparinvest INDEX and ViroGates go up and down completely randomly.

Pair Corralation between Sparinvest INDEX and ViroGates

Assuming the 90 days trading horizon Sparinvest INDEX is expected to generate 52.12 times less return on investment than ViroGates. But when comparing it to its historical volatility, Sparinvest INDEX Globale is 19.13 times less risky than ViroGates. It trades about 0.06 of its potential returns per unit of risk. ViroGates AS is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  575.00  in ViroGates AS on October 9, 2024 and sell it today you would earn a total of  755.00  from holding ViroGates AS or generate 131.3% return on investment over 90 days.

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

Sparinvest INDEX Globale  vs.  ViroGates AS

Sparinvest INDEX Globale

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sparinvest INDEX Globale are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Sparinvest INDEX is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

ViroGates AS

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ViroGates AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, ViroGates displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sparinvest INDEX and ViroGates

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

The idea behind Sparinvest INDEX Globale and ViroGates AS 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.