Correlation Between TKH Group and VAT Group

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

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

Diversification Opportunities for TKH Group and VAT Group

0.91

Correlation Coefficient

TKH Group  VAT Group

Almost no diversification

The 3 months correlation between TKH and VAT is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding TKH Group NV and VAT Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VAT Group AG and TKH Group 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 TKH Group NV are associated (or correlated) with VAT Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VAT Group AG has no effect on the direction of TKH Group i.e., TKH Group and VAT Group go up and down completely randomly.

Pair Corralation between TKH Group and VAT Group

Assuming the 90 days trading horizon TKH Group is expected to generate 1.61 times less return on investment than VAT Group. But when comparing it to its historical volatility, TKH Group NV is 1.54 times less risky than VAT Group. It trades about 0.2 of its potential returns per unit of risk. VAT Group AG is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  26,593  in VAT Group AG on April 21, 2025 and sell it today you would earn a total of  7,397  from holding VAT Group AG or generate 27.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.88%
Values	Daily Returns

TKH Group NV  vs.  VAT Group AG

TKH Group NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TKH Group NV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, TKH Group sustained solid returns over the last few months and may actually be approaching a breakup point.

VAT Group AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VAT Group AG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, VAT Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TKH Group and VAT Group

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

The idea behind TKH Group NV and VAT Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .