Correlation Between Volkswagen and LAVA Medtech

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

By analyzing existing cross correlation between Volkswagen AG 110 and LAVA Medtech Acquisition, you can compare the effects of market volatilities on Volkswagen and LAVA Medtech 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 Volkswagen with a short position of LAVA Medtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and LAVA Medtech.

Diversification Opportunities for Volkswagen and LAVA Medtech

-0.75

Correlation Coefficient

Volkswagen  LAVA Medtech

Pay attention - limited upside

The 3 months correlation between Volkswagen and LAVA is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG 110 and LAVA Medtech Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAVA Medtech Acquisition and Volkswagen 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 Volkswagen AG 110 are associated (or correlated) with LAVA Medtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAVA Medtech Acquisition has no effect on the direction of Volkswagen i.e., Volkswagen and LAVA Medtech go up and down completely randomly.

Pair Corralation between Volkswagen and LAVA Medtech

If you would invest  874.00  in Volkswagen AG 110 on October 22, 2024 and sell it today you would earn a total of  103.00  from holding Volkswagen AG 110 or generate 11.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	2.56%
Values	Daily Returns

Volkswagen AG 110  vs.  LAVA Medtech Acquisition

Volkswagen AG 110

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG 110 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Volkswagen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

LAVA Medtech Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LAVA Medtech Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, LAVA Medtech is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Volkswagen and LAVA Medtech

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

The idea behind Volkswagen AG 110 and LAVA Medtech Acquisition 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.