Correlation Between VIRG NATL and Sun Art

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

By analyzing existing cross correlation between VIRG NATL BANKSH and Sun Art Retail, you can compare the effects of market volatilities on VIRG NATL and Sun Art 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 VIRG NATL with a short position of Sun Art. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIRG NATL and Sun Art.

Diversification Opportunities for VIRG NATL and Sun Art

0.58

Correlation Coefficient

VIRG NATL  Sun Art

Very weak diversification

The 3 months correlation between VIRG and Sun is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding VIRG NATL BANKSH and Sun Art Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Art Retail and VIRG NATL 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 VIRG NATL BANKSH are associated (or correlated) with Sun Art. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Art Retail has no effect on the direction of VIRG NATL i.e., VIRG NATL and Sun Art go up and down completely randomly.

Pair Corralation between VIRG NATL and Sun Art

Assuming the 90 days horizon VIRG NATL BANKSH is expected to under-perform the Sun Art. In addition to that, VIRG NATL is 1.02 times more volatile than Sun Art Retail. It trades about -0.12 of its total potential returns per unit of risk. Sun Art Retail is currently generating about 0.37 per unit of volatility. If you would invest  24.00  in Sun Art Retail on September 25, 2024 and sell it today you would earn a total of  7.00  from holding Sun Art Retail or generate 29.17% return on investment over 90 days.

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

VIRG NATL BANKSH  vs.  Sun Art Retail

VIRG NATL BANKSH

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VIRG NATL BANKSH are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, VIRG NATL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sun Art Retail

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Art Retail are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sun Art reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VIRG NATL and Sun Art

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

The idea behind VIRG NATL BANKSH and Sun Art Retail 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.