Correlation Between Stadler Rail and VAT Group

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

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

Diversification Opportunities for Stadler Rail and VAT Group

0.08

Correlation Coefficient

Stadler Rail  VAT Group

Significant diversification

The 3 months correlation between Stadler and VAT is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Stadler Rail AG 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 Stadler Rail 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 Stadler Rail AG 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 Stadler Rail i.e., Stadler Rail and VAT Group go up and down completely randomly.

Pair Corralation between Stadler Rail and VAT Group

Assuming the 90 days trading horizon Stadler Rail AG is expected to generate 1.07 times more return on investment than VAT Group. However, Stadler Rail is 1.07 times more volatile than VAT Group AG. It trades about 0.05 of its potential returns per unit of risk. VAT Group AG is currently generating about -0.02 per unit of risk. If you would invest  1,990  in Stadler Rail AG on December 30, 2024 and sell it today you would earn a total of  110.00  from holding Stadler Rail AG or generate 5.53% return on investment over 90 days.

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

Stadler Rail AG  vs.  VAT Group AG

Stadler Rail AG

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stadler Rail AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Stadler Rail may actually be approaching a critical reversion point that can send shares even higher in April 2025.

VAT Group AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days VAT Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Stadler Rail and VAT Group

The main advantage of trading using opposite Stadler Rail and VAT Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stadler Rail 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 Stadler Rail AG 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.