Correlation Between Vontobel Holding and Valiant Holding

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

By analyzing existing cross correlation between Vontobel Holding and Valiant Holding AG, you can compare the effects of market volatilities on Vontobel Holding and Valiant 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 Vontobel Holding with a short position of Valiant Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vontobel Holding and Valiant Holding.

Diversification Opportunities for Vontobel Holding and Valiant Holding

0.73

Correlation Coefficient

Vontobel Holding  Valiant Holding

Poor diversification

The 3 months correlation between Vontobel and Valiant is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vontobel Holding and Valiant Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valiant Holding AG and Vontobel Holding 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 Vontobel Holding are associated (or correlated) with Valiant Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valiant Holding AG has no effect on the direction of Vontobel Holding i.e., Vontobel Holding and Valiant Holding go up and down completely randomly.

Pair Corralation between Vontobel Holding and Valiant Holding

Assuming the 90 days trading horizon Vontobel Holding is expected to generate 0.79 times more return on investment than Valiant Holding. However, Vontobel Holding is 1.26 times less risky than Valiant Holding. It trades about 0.64 of its potential returns per unit of risk. Valiant Holding AG is currently generating about 0.09 per unit of risk. If you would invest  6,010  in Vontobel Holding on October 5, 2024 and sell it today you would earn a total of  390.00  from holding Vontobel Holding or generate 6.49% return on investment over 90 days.

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

Vontobel Holding  vs.  Valiant Holding AG

Vontobel Holding

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Vontobel Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Vontobel Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Valiant Holding AG

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Valiant Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Valiant Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vontobel Holding and Valiant Holding

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

The idea behind Vontobel Holding and Valiant 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.