Correlation Between China Conch and Vow ASA

Can any of the company-specific risk be diversified away by investing in both China Conch and Vow ASA 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 China Conch and Vow ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Conch Venture and Vow ASA, you can compare the effects of market volatilities on China Conch and Vow ASA 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 China Conch with a short position of Vow ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Conch and Vow ASA.

Diversification Opportunities for China Conch and Vow ASA

0.1

Correlation Coefficient

China Conch  Vow ASA

Average diversification

The 3 months correlation between China and Vow is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding China Conch Venture and Vow ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vow ASA and China Conch 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 China Conch Venture are associated (or correlated) with Vow ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vow ASA has no effect on the direction of China Conch i.e., China Conch and Vow ASA go up and down completely randomly.

Pair Corralation between China Conch and Vow ASA

Assuming the 90 days horizon China Conch is expected to generate 15.64 times less return on investment than Vow ASA. But when comparing it to its historical volatility, China Conch Venture is 43.61 times less risky than Vow ASA. It trades about 0.13 of its potential returns per unit of risk. Vow ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Vow ASA on December 28, 2024 and sell it today you would earn a total of  1.00  from holding Vow ASA or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

China Conch Venture  vs.  Vow ASA

China Conch Venture

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Conch Venture are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, China Conch is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Vow ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vow ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Vow ASA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Conch and Vow ASA

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

The idea behind China Conch Venture and Vow ASA 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.