Correlation Between CiT and VirnetX Holding

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

By analyzing existing cross correlation between CiT Inc and VirnetX Holding Corp, you can compare the effects of market volatilities on CiT and VirnetX Holding 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 CiT with a short position of VirnetX Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of CiT and VirnetX Holding.

Diversification Opportunities for CiT and VirnetX Holding

0.65

Correlation Coefficient

CiT  VirnetX Holding

Poor diversification

The 3 months correlation between CiT and VirnetX is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CiT Inc and VirnetX Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VirnetX Holding Corp and CiT 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 CiT Inc are associated (or correlated) with VirnetX Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VirnetX Holding Corp has no effect on the direction of CiT i.e., CiT and VirnetX Holding go up and down completely randomly.

Pair Corralation between CiT and VirnetX Holding

Given the investment horizon of 90 days CiT is expected to generate 18.51 times less return on investment than VirnetX Holding. But when comparing it to its historical volatility, CiT Inc is 4.09 times less risky than VirnetX Holding. It trades about 0.02 of its potential returns per unit of risk. VirnetX Holding Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  525.00  in VirnetX Holding Corp on December 27, 2024 and sell it today you would earn a total of  278.00  from holding VirnetX Holding Corp or generate 52.95% return on investment over 90 days.

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

CiT Inc  vs.  VirnetX Holding Corp

CiT Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CiT Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CiT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

VirnetX Holding Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VirnetX Holding Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, VirnetX Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CiT and VirnetX Holding

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

The idea behind CiT Inc and VirnetX Holding Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.