Correlation Between VAT Group and Stadler Rail

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

Diversification Opportunities for VAT Group and Stadler Rail

0.08

Correlation Coefficient

VAT Group  Stadler Rail

Significant diversification

The 3 months correlation between VAT and Stadler is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and Stadler Rail AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stadler Rail 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 Stadler Rail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stadler Rail AG has no effect on the direction of VAT Group i.e., VAT Group and Stadler Rail go up and down completely randomly.

Pair Corralation between VAT Group and Stadler Rail

Assuming the 90 days trading horizon VAT Group AG is expected to under-perform the Stadler Rail. But the stock apears to be less risky and, when comparing its historical volatility, VAT Group AG is 1.07 times less risky than Stadler Rail. The stock trades about -0.02 of its potential returns per unit of risk. The Stadler Rail AG is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,990  in Stadler Rail AG on December 30, 2024 and sell it today you would earn a total of  110.00  from holding Stadler Rail AG or generate 5.53% 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.  Stadler Rail AG

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.

Stadler Rail AG

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stadler Rail AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Stadler Rail may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with VAT Group and Stadler Rail

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

The idea behind VAT Group AG and Stadler Rail 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.