Correlation Between CEO Group and VTC Telecommunicatio

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

By analyzing existing cross correlation between CEO Group JSC and VTC Telecommunications JSC, you can compare the effects of market volatilities on CEO Group and VTC Telecommunicatio 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 CEO Group with a short position of VTC Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEO Group and VTC Telecommunicatio.

Diversification Opportunities for CEO Group and VTC Telecommunicatio

0.62

Correlation Coefficient

CEO Group  VTC Telecommunicatio

Poor diversification

The 3 months correlation between CEO and VTC is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CEO Group JSC and VTC Telecommunications JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VTC Telecommunications and CEO 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 CEO Group JSC are associated (or correlated) with VTC Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VTC Telecommunications has no effect on the direction of CEO Group i.e., CEO Group and VTC Telecommunicatio go up and down completely randomly.

Pair Corralation between CEO Group and VTC Telecommunicatio

Assuming the 90 days trading horizon CEO Group is expected to generate 1.68 times less return on investment than VTC Telecommunicatio. But when comparing it to its historical volatility, CEO Group JSC is 1.31 times less risky than VTC Telecommunicatio. It trades about 0.09 of its potential returns per unit of risk. VTC Telecommunications JSC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  830,000  in VTC Telecommunications JSC on December 25, 2024 and sell it today you would earn a total of  140,000  from holding VTC Telecommunications JSC or generate 16.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.83%
Values	Daily Returns

CEO Group JSC  vs.  VTC Telecommunications JSC

CEO Group JSC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CEO Group JSC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CEO Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

VTC Telecommunications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VTC Telecommunications JSC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, VTC Telecommunicatio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CEO Group and VTC Telecommunicatio

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

The idea behind CEO Group JSC and VTC Telecommunications 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.