Correlation Between VP Bank and PHOENIX N

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

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

Diversification Opportunities for VP Bank and PHOENIX N

-0.36

Correlation Coefficient

VP Bank  PHOENIX N

Very good diversification

The 3 months correlation between VPBN and PHOENIX is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding VP Bank AG and PHOENIX N AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHOENIX N AG and VP Bank 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 VP Bank AG are associated (or correlated) with PHOENIX N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHOENIX N AG has no effect on the direction of VP Bank i.e., VP Bank and PHOENIX N go up and down completely randomly.

Pair Corralation between VP Bank and PHOENIX N

Assuming the 90 days trading horizon VP Bank AG is expected to under-perform the PHOENIX N. But the stock apears to be less risky and, when comparing its historical volatility, VP Bank AG is 1.21 times less risky than PHOENIX N. The stock trades about -0.01 of its potential returns per unit of risk. The PHOENIX N AG is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  31,086  in PHOENIX N AG on September 29, 2024 and sell it today you would earn a total of  11,214  from holding PHOENIX N AG or generate 36.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

VP Bank AG  vs.  PHOENIX N AG

VP Bank AG

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VP Bank AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, VP Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PHOENIX N AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHOENIX N AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, PHOENIX N is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with VP Bank and PHOENIX N

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

The idea behind VP Bank AG and PHOENIX N 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.