Correlation Between VAT Group and Swissquote Group

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

Diversification Opportunities for VAT Group and Swissquote Group

-0.67

Correlation Coefficient

VAT Group  Swissquote Group

Excellent diversification

The 3 months correlation between VAT and Swissquote is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and Swissquote Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swissquote Group 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 Swissquote Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swissquote Group Holding has no effect on the direction of VAT Group i.e., VAT Group and Swissquote Group go up and down completely randomly.

Pair Corralation between VAT Group and Swissquote Group

Assuming the 90 days trading horizon VAT Group AG is expected to under-perform the Swissquote Group. In addition to that, VAT Group is 1.18 times more volatile than Swissquote Group Holding. It trades about -0.08 of its total potential returns per unit of risk. Swissquote Group Holding is currently generating about 0.2 per unit of volatility. If you would invest  28,500  in Swissquote Group Holding on September 5, 2024 and sell it today you would earn a total of  6,720  from holding Swissquote Group Holding or generate 23.58% return on investment over 90 days.

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

VAT Group AG  vs.  Swissquote Group Holding

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Swissquote Group Holding

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Swissquote Group Holding are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Swissquote Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VAT Group and Swissquote Group

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

The idea behind VAT Group AG and Swissquote Group Holding 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.