Correlation Between Vitec Software and XMReality

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

Diversification Opportunities for Vitec Software and XMReality

0.61

Correlation Coefficient

Vitec Software  XMReality

Poor diversification

The 3 months correlation between Vitec and XMReality is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and XMReality AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XMReality 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 XMReality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XMReality AB has no effect on the direction of Vitec Software i.e., Vitec Software and XMReality go up and down completely randomly.

Pair Corralation between Vitec Software and XMReality

Assuming the 90 days trading horizon Vitec Software Group is expected to generate 0.23 times more return on investment than XMReality. However, Vitec Software Group is 4.26 times less risky than XMReality. It trades about -0.01 of its potential returns per unit of risk. XMReality AB is currently generating about -0.01 per unit of risk. If you would invest  52,973  in Vitec Software Group on September 4, 2024 and sell it today you would lose (2,273) from holding Vitec Software Group or give up 4.29% of portfolio value over 90 days.

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

Vitec Software Group  vs.  XMReality 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

XMReality AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XMReality AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Vitec Software and XMReality

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

The idea behind Vitec Software Group and XMReality 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.

Check out your portfolio center.

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.