Correlation Between BTS Group and VGI Public

Can any of the company-specific risk be diversified away by investing in both BTS Group and VGI Public 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 BTS Group and VGI Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BTS Group Holdings and VGI Public, you can compare the effects of market volatilities on BTS Group and VGI Public 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 BTS Group with a short position of VGI Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTS Group and VGI Public.

Diversification Opportunities for BTS Group and VGI Public

0.27

Correlation Coefficient

BTS Group  VGI Public

Modest diversification

The 3 months correlation between BTS and VGI is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding BTS Group Holdings and VGI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VGI Public and BTS Group 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 BTS Group Holdings are associated (or correlated) with VGI Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VGI Public has no effect on the direction of BTS Group i.e., BTS Group and VGI Public go up and down completely randomly.

Pair Corralation between BTS Group and VGI Public

Assuming the 90 days trading horizon BTS Group is expected to generate 1.28 times less return on investment than VGI Public. But when comparing it to its historical volatility, BTS Group Holdings is 2.19 times less risky than VGI Public. It trades about 0.43 of its potential returns per unit of risk. VGI Public is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  234.00  in VGI Public on September 13, 2024 and sell it today you would earn a total of  46.00  from holding VGI Public or generate 19.66% return on investment over 90 days.

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

BTS Group Holdings  vs.  VGI Public

BTS Group Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BTS Group Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, BTS Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

VGI Public

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days VGI Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, VGI Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with BTS Group and VGI Public

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

The idea behind BTS Group Holdings and VGI Public 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 Transaction History module to view history of all your transactions and understand their impact on performance.