Correlation Between VAT Group and Medartis Holding

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

Diversification Opportunities for VAT Group and Medartis Holding

0.54

Correlation Coefficient

VAT Group  Medartis Holding

Very weak diversification

The 3 months correlation between VAT and Medartis is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and Medartis Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medartis Holding 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 Medartis Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medartis Holding has no effect on the direction of VAT Group i.e., VAT Group and Medartis Holding go up and down completely randomly.

Pair Corralation between VAT Group and Medartis Holding

Assuming the 90 days trading horizon VAT Group AG is expected to under-perform the Medartis Holding. But the stock apears to be less risky and, when comparing its historical volatility, VAT Group AG is 1.5 times less risky than Medartis Holding. The stock trades about -0.12 of its potential returns per unit of risk. The Medartis Holding AG is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  5,790  in Medartis Holding AG on September 15, 2024 and sell it today you would lose (340.00) from holding Medartis Holding AG or give up 5.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

VAT Group AG  vs.  Medartis Holding 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Medartis Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medartis Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Medartis Holding 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 VAT Group and Medartis Holding

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

The idea behind VAT Group AG and Medartis 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 Transaction History module to view history of all your transactions and understand their impact on performance.