Correlation Between Vitec Software and Norion Bank

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

Diversification Opportunities for Vitec Software and Norion Bank

-0.44

Correlation Coefficient

Vitec Software  Norion Bank

Very good diversification

The 3 months correlation between Vitec and Norion is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and Norion Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norion Bank 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 Norion Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norion Bank has no effect on the direction of Vitec Software i.e., Vitec Software and Norion Bank go up and down completely randomly.

Pair Corralation between Vitec Software and Norion Bank

Assuming the 90 days trading horizon Vitec Software is expected to generate 1.23 times less return on investment than Norion Bank. In addition to that, Vitec Software is 1.28 times more volatile than Norion Bank. It trades about 0.08 of its total potential returns per unit of risk. Norion Bank is currently generating about 0.12 per unit of volatility. If you would invest  3,635  in Norion Bank on October 24, 2024 and sell it today you would earn a total of  135.00  from holding Norion Bank or generate 3.71% return on investment over 90 days.

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

Vitec Software Group  vs.  Norion Bank

Vitec Software Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vitec Software Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Vitec Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Norion Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Norion Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Vitec Software and Norion Bank

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

The idea behind Vitec Software Group and Norion Bank 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.