Correlation Between All Iron and Vytrus Biotech

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

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

Diversification Opportunities for All Iron and Vytrus Biotech

-0.25

Correlation Coefficient

All Iron  Vytrus Biotech

Very good diversification

The 3 months correlation between All and Vytrus is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding All Iron Re and Vytrus Biotech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vytrus Biotech SA and All Iron 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 All Iron Re are associated (or correlated) with Vytrus Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vytrus Biotech SA has no effect on the direction of All Iron i.e., All Iron and Vytrus Biotech go up and down completely randomly.

Pair Corralation between All Iron and Vytrus Biotech

Assuming the 90 days trading horizon All Iron Re is expected to generate 1.47 times more return on investment than Vytrus Biotech. However, All Iron is 1.47 times more volatile than Vytrus Biotech SA. It trades about 0.04 of its potential returns per unit of risk. Vytrus Biotech SA is currently generating about -0.01 per unit of risk. If you would invest  1,070  in All Iron Re on October 23, 2024 and sell it today you would earn a total of  30.00  from holding All Iron Re or generate 2.8% return on investment over 90 days.

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

All Iron Re  vs.  Vytrus Biotech SA

All Iron Re

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in All Iron Re are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, All Iron is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Vytrus Biotech SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with All Iron and Vytrus Biotech

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

The idea behind All Iron Re and Vytrus Biotech 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.