Correlation Between Big Rock and VIP Entertainment

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

By analyzing existing cross correlation between Big Rock Brewery and VIP Entertainment Technologies, you can compare the effects of market volatilities on Big Rock and VIP Entertainment 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 Big Rock with a short position of VIP Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Rock and VIP Entertainment.

Diversification Opportunities for Big Rock and VIP Entertainment

0.0

Correlation Coefficient

Big Rock  VIP Entertainment

Pay attention - limited upside

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

Pair Corralation between Big Rock and VIP Entertainment

If you would invest  115.00  in Big Rock Brewery on October 11, 2024 and sell it today you would lose (1.00) from holding Big Rock Brewery or give up 0.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Big Rock Brewery  vs.  VIP Entertainment Technologies

Big Rock Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big Rock Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

VIP Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIP Entertainment Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, VIP Entertainment is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Big Rock and VIP Entertainment

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

The idea behind Big Rock Brewery and VIP Entertainment Technologies 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.