Correlation Between Teqnion AB and Vitec Software

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

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

Diversification Opportunities for Teqnion AB and Vitec Software

0.18

Correlation Coefficient

Teqnion AB  Vitec Software

Average diversification

The 3 months correlation between Teqnion and Vitec is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Teqnion AB and Vitec Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitec Software Group and Teqnion AB 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 Teqnion AB are associated (or correlated) with Vitec Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitec Software Group has no effect on the direction of Teqnion AB i.e., Teqnion AB and Vitec Software go up and down completely randomly.

Pair Corralation between Teqnion AB and Vitec Software

Assuming the 90 days trading horizon Teqnion AB is expected to generate 1.36 times more return on investment than Vitec Software. However, Teqnion AB is 1.36 times more volatile than Vitec Software Group. It trades about 0.05 of its potential returns per unit of risk. Vitec Software Group is currently generating about 0.01 per unit of risk. If you would invest  16,520  in Teqnion AB on December 30, 2024 and sell it today you would earn a total of  980.00  from holding Teqnion AB or generate 5.93% return on investment over 90 days.

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

Teqnion AB  vs.  Vitec Software Group

Teqnion AB

Risk-Adjusted Performance

Insignificant

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

Vitec Software Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vitec Software Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vitec Software is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Teqnion AB and Vitec Software

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

The idea behind Teqnion AB and Vitec Software Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.