Correlation Between Vats Liquor and JiShi Media

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

By analyzing existing cross correlation between Vats Liquor Chain and JiShi Media Co, you can compare the effects of market volatilities on Vats Liquor and JiShi Media 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 Vats Liquor with a short position of JiShi Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vats Liquor and JiShi Media.

Diversification Opportunities for Vats Liquor and JiShi Media

0.49

Correlation Coefficient

Vats Liquor  JiShi Media

Very weak diversification

The 3 months correlation between Vats and JiShi is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vats Liquor Chain and JiShi Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JiShi Media and Vats Liquor 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 Vats Liquor Chain are associated (or correlated) with JiShi Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JiShi Media has no effect on the direction of Vats Liquor i.e., Vats Liquor and JiShi Media go up and down completely randomly.

Pair Corralation between Vats Liquor and JiShi Media

Assuming the 90 days trading horizon Vats Liquor Chain is expected to generate 0.81 times more return on investment than JiShi Media. However, Vats Liquor Chain is 1.23 times less risky than JiShi Media. It trades about -0.13 of its potential returns per unit of risk. JiShi Media Co is currently generating about -0.25 per unit of risk. If you would invest  1,827  in Vats Liquor Chain on October 11, 2024 and sell it today you would lose (210.00) from holding Vats Liquor Chain or give up 11.49% of portfolio value over 90 days.

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

Vats Liquor Chain  vs.  JiShi Media Co

Vats Liquor Chain

Risk-Adjusted Performance

1 of 100

Weak

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

JiShi Media

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JiShi Media Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JiShi Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vats Liquor and JiShi Media

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

The idea behind Vats Liquor Chain and JiShi Media 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.