Correlation Between VAT Group and OC Oerlikon

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

Diversification Opportunities for VAT Group and OC Oerlikon

0.19

Correlation Coefficient

VAT Group  OC Oerlikon

Average diversification

The 3 months correlation between VAT and OERL is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and OC Oerlikon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OC Oerlikon Corp 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 OC Oerlikon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OC Oerlikon Corp has no effect on the direction of VAT Group i.e., VAT Group and OC Oerlikon go up and down completely randomly.

Pair Corralation between VAT Group and OC Oerlikon

Assuming the 90 days trading horizon VAT Group AG is expected to under-perform the OC Oerlikon. In addition to that, VAT Group is 1.18 times more volatile than OC Oerlikon Corp. It trades about -0.02 of its total potential returns per unit of risk. OC Oerlikon Corp is currently generating about 0.16 per unit of volatility. If you would invest  351.00  in OC Oerlikon Corp on December 29, 2024 and sell it today you would earn a total of  72.00  from holding OC Oerlikon Corp or generate 20.51% return on investment over 90 days.

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

VAT Group AG  vs.  OC Oerlikon Corp

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.

OC Oerlikon Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OC Oerlikon Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, OC Oerlikon showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VAT Group and OC Oerlikon

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

The idea behind VAT Group AG and OC Oerlikon Corp 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.