Correlation Between Vitec Software and EWork Group

Can any of the company-specific risk be diversified away by investing in both Vitec Software and EWork 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 Vitec Software and EWork Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vitec Software Group and eWork Group AB, you can compare the effects of market volatilities on Vitec Software and EWork 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 Vitec Software with a short position of EWork Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vitec Software and EWork Group.

Diversification Opportunities for Vitec Software and EWork Group

-0.02

Correlation Coefficient

Vitec Software  EWork Group

Good diversification

The 3 months correlation between Vitec and EWork is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and eWork Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eWork Group AB and Vitec Software 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 Vitec Software Group are associated (or correlated) with EWork Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eWork Group AB has no effect on the direction of Vitec Software i.e., Vitec Software and EWork Group go up and down completely randomly.

Pair Corralation between Vitec Software and EWork Group

Assuming the 90 days trading horizon Vitec Software Group is expected to generate 1.87 times more return on investment than EWork Group. However, Vitec Software is 1.87 times more volatile than eWork Group AB. It trades about 0.4 of its potential returns per unit of risk. eWork Group AB is currently generating about 0.04 per unit of risk. If you would invest  46,474  in Vitec Software Group on September 23, 2024 and sell it today you would earn a total of  6,576  from holding Vitec Software Group or generate 14.15% return on investment over 90 days.

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

Vitec Software Group  vs.  eWork Group AB

Vitec Software Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vitec Software Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vitec Software is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

eWork Group AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in eWork Group AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EWork Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vitec Software and EWork Group

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

The idea behind Vitec Software Group and eWork Group AB 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.