Correlation Between Victory New and Eminent Luggage

Can any of the company-specific risk be diversified away by investing in both Victory New and Eminent Luggage 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 Eminent Luggage 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 Eminent Luggage, you can compare the effects of market volatilities on Victory New and Eminent Luggage 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 Eminent Luggage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory New and Eminent Luggage.

Diversification Opportunities for Victory New and Eminent Luggage

0.41

Correlation Coefficient

Victory New  Eminent Luggage

Very weak diversification

The 3 months correlation between Victory and Eminent is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Victory New Materials and Eminent Luggage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eminent Luggage 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 Eminent Luggage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eminent Luggage has no effect on the direction of Victory New i.e., Victory New and Eminent Luggage go up and down completely randomly.

Pair Corralation between Victory New and Eminent Luggage

Assuming the 90 days trading horizon Victory New Materials is expected to generate 0.77 times more return on investment than Eminent Luggage. However, Victory New Materials is 1.3 times less risky than Eminent Luggage. It trades about -0.11 of its potential returns per unit of risk. Eminent Luggage is currently generating about -0.14 per unit of risk. If you would invest  947.00  in Victory New Materials on December 24, 2024 and sell it today you would lose (62.00) from holding Victory New Materials or give up 6.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

Victory New Materials  vs.  Eminent Luggage

Victory New Materials

Risk-Adjusted Performance

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.

Eminent Luggage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eminent Luggage 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.

Pair Trading with Victory New and Eminent Luggage

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

The idea behind Victory New Materials and Eminent Luggage 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 Commodity Directory module to find actively traded commodities issued by global exchanges.