Correlation Between VAT Group and Bystronic

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

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

Diversification Opportunities for VAT Group and Bystronic

0.87

Correlation Coefficient

VAT Group  Bystronic

Very poor diversification

The 3 months correlation between VAT and Bystronic is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and Bystronic AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bystronic AG and VAT 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 VAT Group AG are associated (or correlated) with Bystronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bystronic AG has no effect on the direction of VAT Group i.e., VAT Group and Bystronic go up and down completely randomly.

Pair Corralation between VAT Group and Bystronic

Assuming the 90 days trading horizon VAT Group is expected to generate 7.91 times less return on investment than Bystronic. But when comparing it to its historical volatility, VAT Group AG is 1.12 times less risky than Bystronic. It trades about 0.05 of its potential returns per unit of risk. Bystronic AG is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  24,200  in Bystronic AG on April 25, 2025 and sell it today you would earn a total of  14,800  from holding Bystronic AG or generate 61.16% return on investment over 90 days.

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

VAT Group AG  vs.  Bystronic AG

VAT Group AG

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VAT Group AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, VAT Group may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Bystronic AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bystronic AG are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bystronic showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VAT Group and Bystronic

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

The idea behind VAT Group AG and Bystronic 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.