Correlation Between Innodep and VAIV

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

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

Diversification Opportunities for Innodep and VAIV

0.23

Correlation Coefficient

Innodep  VAIV

Modest diversification

The 3 months correlation between Innodep and VAIV is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Innodep and VAIV Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VAIV and Innodep 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 Innodep 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 Innodep i.e., Innodep and VAIV go up and down completely randomly.

Pair Corralation between Innodep and VAIV

Assuming the 90 days trading horizon Innodep is expected to under-perform the VAIV. But the stock apears to be less risky and, when comparing its historical volatility, Innodep is 3.31 times less risky than VAIV. The stock trades about -0.08 of its potential returns per unit of risk. The 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 29, 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Innodep  vs.  VAIV Co

Innodep

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innodep has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company 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 Innodep and VAIV

The main advantage of trading using opposite Innodep and VAIV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innodep 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 Innodep 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.