Correlation Between INDIKA ENERGY and Vastned Retail

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

By analyzing existing cross correlation between INDIKA ENERGY and Vastned Retail NV, you can compare the effects of market volatilities on INDIKA ENERGY and Vastned Retail 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 INDIKA ENERGY with a short position of Vastned Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDIKA ENERGY and Vastned Retail.

Diversification Opportunities for INDIKA ENERGY and Vastned Retail

0.34

Correlation Coefficient

INDIKA ENERGY  Vastned Retail

Weak diversification

The 3 months correlation between INDIKA and Vastned is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding INDIKA ENERGY and Vastned Retail NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail NV and INDIKA ENERGY 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 INDIKA ENERGY are associated (or correlated) with Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail NV has no effect on the direction of INDIKA ENERGY i.e., INDIKA ENERGY and Vastned Retail go up and down completely randomly.

Pair Corralation between INDIKA ENERGY and Vastned Retail

Assuming the 90 days trading horizon INDIKA ENERGY is expected to under-perform the Vastned Retail. In addition to that, INDIKA ENERGY is 4.01 times more volatile than Vastned Retail NV. It trades about -0.07 of its total potential returns per unit of risk. Vastned Retail NV is currently generating about -0.08 per unit of volatility. If you would invest  2,210  in Vastned Retail NV on September 29, 2024 and sell it today you would lose (105.00) from holding Vastned Retail NV or give up 4.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

INDIKA ENERGY  vs.  Vastned Retail NV

INDIKA ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDIKA ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Vastned Retail NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vastned Retail NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vastned Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INDIKA ENERGY and Vastned Retail

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

The idea behind INDIKA ENERGY and Vastned Retail NV 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.