Correlation Between GOODTECH ASA and Vinci S

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

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

Diversification Opportunities for GOODTECH ASA and Vinci S

0.79

Correlation Coefficient

GOODTECH ASA  Vinci S

Poor diversification

The 3 months correlation between GOODTECH and Vinci is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GOODTECH ASA A and Vinci S A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci S A and GOODTECH ASA 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 GOODTECH ASA A are associated (or correlated) with Vinci S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci S A has no effect on the direction of GOODTECH ASA i.e., GOODTECH ASA and Vinci S go up and down completely randomly.

Pair Corralation between GOODTECH ASA and Vinci S

Assuming the 90 days horizon GOODTECH ASA A is expected to generate 1.74 times more return on investment than Vinci S. However, GOODTECH ASA is 1.74 times more volatile than Vinci S A. It trades about 0.01 of its potential returns per unit of risk. Vinci S A is currently generating about -0.02 per unit of risk. If you would invest  86.00  in GOODTECH ASA A on September 24, 2024 and sell it today you would earn a total of  1.00  from holding GOODTECH ASA A or generate 1.16% return on investment over 90 days.

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

GOODTECH ASA A  vs.  Vinci S A

GOODTECH ASA A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GOODTECH ASA A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Vinci S A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vinci S A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GOODTECH ASA and Vinci S

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

The idea behind GOODTECH ASA A and Vinci S A 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.