Correlation Between Generic Engineering and Vaxtex Cotfab

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

By analyzing existing cross correlation between Generic Engineering Construction and Vaxtex Cotfab Limited, you can compare the effects of market volatilities on Generic Engineering and Vaxtex Cotfab 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 Generic Engineering with a short position of Vaxtex Cotfab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generic Engineering and Vaxtex Cotfab.

Diversification Opportunities for Generic Engineering and Vaxtex Cotfab

0.84

Correlation Coefficient

Generic Engineering  Vaxtex Cotfab

Very poor diversification

The 3 months correlation between Generic and Vaxtex is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Generic Engineering Constructi and Vaxtex Cotfab Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaxtex Cotfab Limited and Generic Engineering 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 Generic Engineering Construction are associated (or correlated) with Vaxtex Cotfab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaxtex Cotfab Limited has no effect on the direction of Generic Engineering i.e., Generic Engineering and Vaxtex Cotfab go up and down completely randomly.

Pair Corralation between Generic Engineering and Vaxtex Cotfab

Assuming the 90 days trading horizon Generic Engineering is expected to generate 51.07 times less return on investment than Vaxtex Cotfab. In addition to that, Generic Engineering is 1.06 times more volatile than Vaxtex Cotfab Limited. It trades about 0.0 of its total potential returns per unit of risk. Vaxtex Cotfab Limited is currently generating about 0.08 per unit of volatility. If you would invest  80.00  in Vaxtex Cotfab Limited on October 4, 2024 and sell it today you would earn a total of  10.00  from holding Vaxtex Cotfab Limited or generate 12.5% return on investment over 90 days.

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

Generic Engineering Constructi  vs.  Vaxtex Cotfab Limited

Generic Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generic Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Generic Engineering is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Vaxtex Cotfab Limited

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Generic Engineering and Vaxtex Cotfab

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

The idea behind Generic Engineering Construction and Vaxtex Cotfab Limited 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.