Correlation Between AgriBank Securities and Vnsteel Vicasa

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

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

Diversification Opportunities for AgriBank Securities and Vnsteel Vicasa

-0.13

Correlation Coefficient

AgriBank Securities  Vnsteel Vicasa

Good diversification

The 3 months correlation between AgriBank and Vnsteel is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding AgriBank Securities JSC and Vnsteel Vicasa JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vnsteel Vicasa JSC and AgriBank Securities 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 AgriBank Securities JSC are associated (or correlated) with Vnsteel Vicasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vnsteel Vicasa JSC has no effect on the direction of AgriBank Securities i.e., AgriBank Securities and Vnsteel Vicasa go up and down completely randomly.

Pair Corralation between AgriBank Securities and Vnsteel Vicasa

Assuming the 90 days trading horizon AgriBank Securities is expected to generate 3.97 times less return on investment than Vnsteel Vicasa. But when comparing it to its historical volatility, AgriBank Securities JSC is 1.14 times less risky than Vnsteel Vicasa. It trades about 0.04 of its potential returns per unit of risk. Vnsteel Vicasa JSC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  870,000  in Vnsteel Vicasa JSC on September 12, 2024 and sell it today you would earn a total of  775,000  from holding Vnsteel Vicasa JSC or generate 89.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.11%
Values	Daily Returns

AgriBank Securities JSC  vs.  Vnsteel Vicasa JSC

AgriBank Securities JSC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AgriBank Securities JSC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, AgriBank Securities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Vnsteel Vicasa JSC

Risk-Adjusted Performance

37 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Vnsteel Vicasa JSC are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vnsteel Vicasa displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AgriBank Securities and Vnsteel Vicasa

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

The idea behind AgriBank Securities JSC and Vnsteel Vicasa JSC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.