Correlation Between Vitec Software and NOTE AB

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

Diversification Opportunities for Vitec Software and NOTE AB

0.0

Correlation Coefficient

Vitec Software  NOTE AB

Pay attention - limited upside

The 3 months correlation between Vitec and NOTE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and NOTE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOTE 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 NOTE AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOTE AB has no effect on the direction of Vitec Software i.e., Vitec Software and NOTE AB go up and down completely randomly.

Pair Corralation between Vitec Software and NOTE AB

Assuming the 90 days trading horizon Vitec Software Group is expected to generate 0.82 times more return on investment than NOTE AB. However, Vitec Software Group is 1.22 times less risky than NOTE AB. It trades about 0.04 of its potential returns per unit of risk. NOTE AB is currently generating about -0.01 per unit of risk. If you would invest  40,220  in Vitec Software Group on September 26, 2024 and sell it today you would earn a total of  12,980  from holding Vitec Software Group or generate 32.27% return on investment over 90 days.

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

Vitec Software Group  vs.  NOTE AB

Vitec Software Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vitec Software Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

NOTE AB

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NOTE AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, NOTE AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vitec Software and NOTE AB

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

The idea behind Vitec Software Group and NOTE 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.