Correlation Between VAT Group and Banque Cantonale

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

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

Diversification Opportunities for VAT Group and Banque Cantonale

-0.02

Correlation Coefficient

VAT Group  Banque Cantonale

Good diversification

The 3 months correlation between VAT and Banque is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and Banque Cantonale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banque Cantonale and VAT 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 VAT Group AG are associated (or correlated) with Banque Cantonale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banque Cantonale has no effect on the direction of VAT Group i.e., VAT Group and Banque Cantonale go up and down completely randomly.

Pair Corralation between VAT Group and Banque Cantonale

Assuming the 90 days trading horizon VAT Group AG is expected to under-perform the Banque Cantonale. In addition to that, VAT Group is 2.61 times more volatile than Banque Cantonale. It trades about -0.02 of its total potential returns per unit of risk. Banque Cantonale is currently generating about 0.29 per unit of volatility. If you would invest  8,350  in Banque Cantonale on December 30, 2024 and sell it today you would earn a total of  1,410  from holding Banque Cantonale or generate 16.89% return on investment over 90 days.

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

VAT Group AG  vs.  Banque Cantonale

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.

Banque Cantonale

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Banque Cantonale are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Banque Cantonale showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VAT Group and Banque Cantonale

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

The idea behind VAT Group AG and Banque Cantonale 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.