Correlation Between Vow ASA and Euro Tech

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

By analyzing existing cross correlation between Vow ASA and Euro Tech Holdings, you can compare the effects of market volatilities on Vow ASA and Euro Tech 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 Vow ASA with a short position of Euro Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vow ASA and Euro Tech.

Diversification Opportunities for Vow ASA and Euro Tech

0.0

Correlation Coefficient

Vow ASA  Euro Tech

Pay attention - limited upside

The 3 months correlation between Vow and Euro is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA and Euro Tech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Tech Holdings and Vow ASA 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 Vow ASA are associated (or correlated) with Euro Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Tech Holdings has no effect on the direction of Vow ASA i.e., Vow ASA and Euro Tech go up and down completely randomly.

Pair Corralation between Vow ASA and Euro Tech

Assuming the 90 days horizon Vow ASA is expected to under-perform the Euro Tech. In addition to that, Vow ASA is 1.52 times more volatile than Euro Tech Holdings. It trades about -0.04 of its total potential returns per unit of risk. Euro Tech Holdings is currently generating about -0.03 per unit of volatility. If you would invest  133.00  in Euro Tech Holdings on February 3, 2025 and sell it today you would lose (16.00) from holding Euro Tech Holdings or give up 12.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

Vow ASA  vs.  Euro Tech Holdings

Vow ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vow ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Euro Tech Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Euro Tech Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Vow ASA and Euro Tech

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

The idea behind Vow ASA and Euro Tech Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.