Correlation Between Fintech Select and Venzee Technologies

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

By analyzing existing cross correlation between Fintech Select and Venzee Technologies, you can compare the effects of market volatilities on Fintech Select and Venzee Technologies 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 Fintech Select with a short position of Venzee Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fintech Select and Venzee Technologies.

Diversification Opportunities for Fintech Select and Venzee Technologies

0.01

Correlation Coefficient

Fintech Select  Venzee Technologies

Significant diversification

The 3 months correlation between Fintech and Venzee is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Fintech Select and Venzee Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Venzee Technologies and Fintech Select 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 Fintech Select are associated (or correlated) with Venzee Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Venzee Technologies has no effect on the direction of Fintech Select i.e., Fintech Select and Venzee Technologies go up and down completely randomly.

Pair Corralation between Fintech Select and Venzee Technologies

Assuming the 90 days trading horizon Fintech Select is not expected to generate positive returns. Moreover, Fintech Select is 3.12 times more volatile than Venzee Technologies. It trades away all of its potential returns to assume current level of volatility. Venzee Technologies is currently generating about -0.06 per unit of risk. If you would invest  3.00  in Fintech Select on October 8, 2024 and sell it today you would lose (0.50) from holding Fintech Select or give up 16.67% of portfolio value over 90 days.

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

Fintech Select  vs.  Venzee Technologies

Fintech Select

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fintech Select are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Fintech Select showed solid returns over the last few months and may actually be approaching a breakup point.

Venzee Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Venzee Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Fintech Select and Venzee Technologies

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

The idea behind Fintech Select and Venzee Technologies 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.