Correlation Between Alton Sports and VAIV

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

By analyzing existing cross correlation between Alton Sports CoLtd and VAIV Co, you can compare the effects of market volatilities on Alton Sports and VAIV 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 Alton Sports with a short position of VAIV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alton Sports and VAIV.

Diversification Opportunities for Alton Sports and VAIV

-0.13

Correlation Coefficient

Alton Sports  VAIV

Good diversification

The 3 months correlation between Alton and VAIV is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Alton Sports CoLtd and VAIV Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VAIV and Alton Sports 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 Alton Sports CoLtd are associated (or correlated) with VAIV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VAIV has no effect on the direction of Alton Sports i.e., Alton Sports and VAIV go up and down completely randomly.

Pair Corralation between Alton Sports and VAIV

Assuming the 90 days trading horizon Alton Sports is expected to generate 11.63 times less return on investment than VAIV. But when comparing it to its historical volatility, Alton Sports CoLtd is 2.84 times less risky than VAIV. It trades about 0.02 of its potential returns per unit of risk. VAIV Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  374,000  in VAIV Co on December 30, 2024 and sell it today you would earn a total of  54,500  from holding VAIV Co or generate 14.57% return on investment over 90 days.

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

Alton Sports CoLtd  vs.  VAIV Co

Alton Sports CoLtd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alton Sports CoLtd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Alton Sports is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

VAIV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VAIV Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, VAIV sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alton Sports and VAIV

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

The idea behind Alton Sports CoLtd and VAIV Co 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.