Correlation Between Alpha One and VMG Consumer

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

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

Diversification Opportunities for Alpha One and VMG Consumer

0.0

Correlation Coefficient

Alpha One  VMG Consumer

Pay attention - limited upside

The 3 months correlation between Alpha and VMG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alpha One and VMG Consumer Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VMG Consumer Acquisition and Alpha One 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 Alpha One are associated (or correlated) with VMG Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VMG Consumer Acquisition has no effect on the direction of Alpha One i.e., Alpha One and VMG Consumer go up and down completely randomly.

Pair Corralation between Alpha One and VMG Consumer

If you would invest  1,041  in VMG Consumer Acquisition on September 18, 2024 and sell it today you would earn a total of  0.00  from holding VMG Consumer Acquisition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Alpha One  vs.  VMG Consumer Acquisition

Alpha One

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Alpha One is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

VMG Consumer Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VMG Consumer Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, VMG Consumer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alpha One and VMG Consumer

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

The idea behind Alpha One and VMG Consumer Acquisition 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.