Correlation Between Tecan Group and VAT Group

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

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

Diversification Opportunities for Tecan Group and VAT Group

0.03

Correlation Coefficient

Tecan Group  VAT Group

Significant diversification

The 3 months correlation between Tecan and VAT is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tecan Group 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 Tecan Group 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 Tecan Group 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 Tecan Group i.e., Tecan Group and VAT Group go up and down completely randomly.

Pair Corralation between Tecan Group and VAT Group

Assuming the 90 days trading horizon Tecan Group AG is expected to under-perform the VAT Group. But the stock apears to be less risky and, when comparing its historical volatility, Tecan Group AG is 1.23 times less risky than VAT Group. The stock trades about -0.12 of its potential returns per unit of risk. The VAT Group AG is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  34,280  in VAT Group AG on December 29, 2024 and sell it today you would lose (1,700) from holding VAT Group AG or give up 4.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Tecan Group AG  vs.  VAT Group AG

Tecan Group AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tecan Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 Tecan Group and VAT Group

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

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.