Correlation Between VAT Group and Holcim AG

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

Diversification Opportunities for VAT Group and Holcim AG

-0.52

Correlation Coefficient

VAT Group  Holcim AG

Excellent diversification

The 3 months correlation between VAT and Holcim is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and Holcim AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim AG 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 Holcim AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holcim AG has no effect on the direction of VAT Group i.e., VAT Group and Holcim AG go up and down completely randomly.

Pair Corralation between VAT Group and Holcim AG

Assuming the 90 days trading horizon VAT Group AG is expected to under-perform the Holcim AG. In addition to that, VAT Group is 1.68 times more volatile than Holcim AG. It trades about -0.17 of its total potential returns per unit of risk. Holcim AG is currently generating about 0.1 per unit of volatility. If you would invest  8,246  in Holcim AG on October 7, 2024 and sell it today you would earn a total of  516.00  from holding Holcim AG or generate 6.26% return on investment over 90 days.

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

VAT Group AG  vs.  Holcim AG

VAT Group AG

Risk-Adjusted Performance

0 of 100

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 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.

Holcim AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Holcim AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Holcim AG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with VAT Group and Holcim AG

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

The idea behind VAT Group AG and Holcim 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.