Correlation Between Vytrus Biotech and Labiana Health

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

By analyzing existing cross correlation between Vytrus Biotech SA and Labiana Health SA, you can compare the effects of market volatilities on Vytrus Biotech and Labiana Health 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 Vytrus Biotech with a short position of Labiana Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vytrus Biotech and Labiana Health.

Diversification Opportunities for Vytrus Biotech and Labiana Health

0.54

Correlation Coefficient

Vytrus Biotech  Labiana Health

Very weak diversification

The 3 months correlation between Vytrus and Labiana is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Vytrus Biotech SA and Labiana Health SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labiana Health SA and Vytrus Biotech 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 Vytrus Biotech SA are associated (or correlated) with Labiana Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labiana Health SA has no effect on the direction of Vytrus Biotech i.e., Vytrus Biotech and Labiana Health go up and down completely randomly.

Pair Corralation between Vytrus Biotech and Labiana Health

Assuming the 90 days trading horizon Vytrus Biotech SA is expected to generate 0.68 times more return on investment than Labiana Health. However, Vytrus Biotech SA is 1.47 times less risky than Labiana Health. It trades about 0.24 of its potential returns per unit of risk. Labiana Health SA is currently generating about -0.02 per unit of risk. If you would invest  216.00  in Vytrus Biotech SA on December 30, 2024 and sell it today you would earn a total of  60.00  from holding Vytrus Biotech SA or generate 27.78% return on investment over 90 days.

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

Vytrus Biotech SA  vs.  Labiana Health SA

Vytrus Biotech SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vytrus Biotech SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Vytrus Biotech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Labiana Health SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Labiana Health SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Labiana Health is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vytrus Biotech and Labiana Health

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

The idea behind Vytrus Biotech SA and Labiana Health SA 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.