Correlation Between Vopia and BIO Key

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

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

Diversification Opportunities for Vopia and BIO Key

-0.55

Correlation Coefficient

Vopia  BIO Key

Excellent diversification

The 3 months correlation between Vopia and BIO is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Vopia Inc and BIO Key International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIO Key International and Vopia 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 Vopia Inc are associated (or correlated) with BIO Key. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIO Key International has no effect on the direction of Vopia i.e., Vopia and BIO Key go up and down completely randomly.

Pair Corralation between Vopia and BIO Key

Given the investment horizon of 90 days Vopia is expected to generate 2.27 times less return on investment than BIO Key. But when comparing it to its historical volatility, Vopia Inc is 1.1 times less risky than BIO Key. It trades about 0.08 of its potential returns per unit of risk. BIO Key International is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  92.00  in BIO Key International on October 26, 2024 and sell it today you would earn a total of  76.00  from holding BIO Key International or generate 82.61% return on investment over 90 days.

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

Vopia Inc  vs.  BIO Key International

Vopia Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vopia Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vopia reported solid returns over the last few months and may actually be approaching a breakup point.

BIO Key International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BIO Key International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, BIO Key demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vopia and BIO Key

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

The idea behind Vopia Inc and BIO Key International 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.