Correlation Between Vats Liquor and IRay Technology

Can any of the company-specific risk be diversified away by investing in both Vats Liquor and IRay 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 Vats Liquor and IRay Technology 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 iRay Technology Co, you can compare the effects of market volatilities on Vats Liquor and IRay 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 Vats Liquor with a short position of IRay Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vats Liquor and IRay Technology.

Diversification Opportunities for Vats Liquor and IRay Technology

0.11

Correlation Coefficient

Vats Liquor  IRay Technology

Average diversification

The 3 months correlation between Vats and IRay is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Vats Liquor Chain and iRay Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iRay Technology 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 IRay Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iRay Technology has no effect on the direction of Vats Liquor i.e., Vats Liquor and IRay Technology go up and down completely randomly.

Pair Corralation between Vats Liquor and IRay Technology

Assuming the 90 days trading horizon Vats Liquor Chain is expected to generate 1.42 times more return on investment than IRay Technology. However, Vats Liquor is 1.42 times more volatile than iRay Technology Co. It trades about -0.07 of its potential returns per unit of risk. iRay Technology Co is currently generating about -0.21 per unit of risk. If you would invest  2,114  in Vats Liquor Chain on October 8, 2024 and sell it today you would lose (498.00) from holding Vats Liquor Chain or give up 23.56% of portfolio value over 90 days.

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

Vats Liquor Chain  vs.  iRay Technology Co

Vats Liquor Chain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vats Liquor Chain 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 somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

iRay Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iRay Technology Co 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 somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Vats Liquor and IRay Technology

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

The idea behind Vats Liquor Chain and iRay Technology 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.