Correlation Between VAT Group and Straumann Holding

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

Diversification Opportunities for VAT Group and Straumann Holding

0.08

Correlation Coefficient

VAT Group  Straumann Holding

Significant diversification

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

Pair Corralation between VAT Group and Straumann Holding

Assuming the 90 days trading horizon VAT Group is expected to generate 6.4 times less return on investment than Straumann Holding. In addition to that, VAT Group is 1.29 times more volatile than Straumann Holding AG. It trades about 0.01 of its total potential returns per unit of risk. Straumann Holding AG is currently generating about 0.11 per unit of volatility. If you would invest  11,385  in Straumann Holding AG on November 28, 2024 and sell it today you would earn a total of  1,080  from holding Straumann Holding AG or generate 9.49% 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.  Straumann Holding AG

VAT Group AG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VAT Group AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Straumann Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Straumann Holding AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Straumann Holding may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with VAT Group and Straumann Holding

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

The idea behind VAT Group AG and Straumann 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.