Correlation Between C I and VFD GROUP

Can any of the company-specific risk be diversified away by investing in both C I and VFD GROUP 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 C I and VFD GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between C I LEASING and VFD GROUP, you can compare the effects of market volatilities on C I and VFD GROUP 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 C I with a short position of VFD GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of C I and VFD GROUP.

Diversification Opportunities for C I and VFD GROUP

0.04

Correlation Coefficient

C I  VFD GROUP

Significant diversification

The 3 months correlation between CILEASING and VFD is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding C I LEASING and VFD GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VFD GROUP and C I 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 C I LEASING are associated (or correlated) with VFD GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VFD GROUP has no effect on the direction of C I i.e., C I and VFD GROUP go up and down completely randomly.

Pair Corralation between C I and VFD GROUP

Assuming the 90 days trading horizon C I LEASING is expected to generate 0.83 times more return on investment than VFD GROUP. However, C I LEASING is 1.2 times less risky than VFD GROUP. It trades about 0.16 of its potential returns per unit of risk. VFD GROUP is currently generating about 0.0 per unit of risk. If you would invest  382.00  in C I LEASING on September 5, 2024 and sell it today you would earn a total of  33.00  from holding C I LEASING or generate 8.64% return on investment over 90 days.

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

C I LEASING  vs.  VFD GROUP

C I LEASING

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in C I LEASING are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, C I is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

VFD GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VFD GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VFD GROUP is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with C I and VFD GROUP

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

The idea behind C I LEASING and VFD 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.