Correlation Between Canadian General and Vitec Software

Can any of the company-specific risk be diversified away by investing in both Canadian General and Vitec Software 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 Canadian General and Vitec Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canadian General Investments and Vitec Software Group, you can compare the effects of market volatilities on Canadian General and Vitec Software 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 Canadian General with a short position of Vitec Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Vitec Software.

Diversification Opportunities for Canadian General and Vitec Software

-0.28

Correlation Coefficient

Canadian General  Vitec Software

Very good diversification

The 3 months correlation between Canadian and Vitec is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Vitec Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitec Software Group and Canadian General 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 Canadian General Investments are associated (or correlated) with Vitec Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitec Software Group has no effect on the direction of Canadian General i.e., Canadian General and Vitec Software go up and down completely randomly.

Pair Corralation between Canadian General and Vitec Software

Assuming the 90 days trading horizon Canadian General Investments is expected to under-perform the Vitec Software. But the stock apears to be less risky and, when comparing its historical volatility, Canadian General Investments is 1.01 times less risky than Vitec Software. The stock trades about -0.1 of its potential returns per unit of risk. The Vitec Software Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  53,400  in Vitec Software Group on December 23, 2024 and sell it today you would earn a total of  2,900  from holding Vitec Software Group or generate 5.43% return on investment over 90 days.

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

Canadian General Investments  vs.  Vitec Software Group

Canadian General Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canadian General Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Vitec Software Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vitec Software Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vitec Software may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Canadian General and Vitec Software

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

The idea behind Canadian General Investments and Vitec Software Group 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.