Correlation Between Tecan Group and VZ Holding

Can any of the company-specific risk be diversified away by investing in both Tecan Group and VZ Holding 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 VZ Holding 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 VZ Holding AG, you can compare the effects of market volatilities on Tecan Group and VZ Holding 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 VZ Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tecan Group and VZ Holding.

Diversification Opportunities for Tecan Group and VZ Holding

-0.51

Correlation Coefficient

Tecan Group  VZ Holding

Excellent diversification

The 3 months correlation between Tecan and VZN is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tecan Group AG and VZ Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VZ Holding 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 VZ Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VZ Holding AG has no effect on the direction of Tecan Group i.e., Tecan Group and VZ Holding go up and down completely randomly.

Pair Corralation between Tecan Group and VZ Holding

Assuming the 90 days trading horizon Tecan Group AG is expected to under-perform the VZ Holding. But the stock apears to be less risky and, when comparing its historical volatility, Tecan Group AG is 1.02 times less risky than VZ Holding. The stock trades about -0.11 of its potential returns per unit of risk. The VZ Holding AG is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  14,680  in VZ Holding AG on October 5, 2024 and sell it today you would earn a total of  180.00  from holding VZ Holding AG or generate 1.23% return on investment over 90 days.

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

Tecan Group AG  vs.  VZ Holding AG

Tecan Group AG

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

VZ Holding AG

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days VZ Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, VZ Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tecan Group and VZ Holding

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

The idea behind Tecan Group AG and VZ Holding 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.