Correlation Between Victory New and Microtips Technology

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

By analyzing existing cross correlation between Victory New Materials and Microtips Technology, you can compare the effects of market volatilities on Victory New and Microtips Technology 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 Victory New with a short position of Microtips Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory New and Microtips Technology.

Diversification Opportunities for Victory New and Microtips Technology

0.14

Correlation Coefficient

Victory New  Microtips Technology

Average diversification

The 3 months correlation between Victory and Microtips is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Victory New Materials and Microtips Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microtips Technology and Victory New 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 Victory New Materials are associated (or correlated) with Microtips Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microtips Technology has no effect on the direction of Victory New i.e., Victory New and Microtips Technology go up and down completely randomly.

Pair Corralation between Victory New and Microtips Technology

Assuming the 90 days trading horizon Victory New is expected to generate 61.44 times less return on investment than Microtips Technology. But when comparing it to its historical volatility, Victory New Materials is 1.63 times less risky than Microtips Technology. It trades about 0.0 of its potential returns per unit of risk. Microtips Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,885  in Microtips Technology on September 26, 2024 and sell it today you would earn a total of  780.00  from holding Microtips Technology or generate 41.38% return on investment over 90 days.

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

Victory New Materials  vs.  Microtips Technology

Victory New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory New Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Microtips Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Microtips Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Microtips Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Victory New and Microtips Technology

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

The idea behind Victory New Materials and Microtips Technology 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.