Correlation Between Vodafone Idea and Thomas Scott

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

By analyzing existing cross correlation between Vodafone Idea Limited and Thomas Scott Limited, you can compare the effects of market volatilities on Vodafone Idea and Thomas Scott 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 Vodafone Idea with a short position of Thomas Scott. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Idea and Thomas Scott.

Diversification Opportunities for Vodafone Idea and Thomas Scott

0.0

Correlation Coefficient

Vodafone Idea  Thomas Scott

Pay attention - limited upside

The 3 months correlation between Vodafone and Thomas is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Idea Limited and Thomas Scott Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thomas Scott Limited and Vodafone Idea 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 Vodafone Idea Limited are associated (or correlated) with Thomas Scott. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thomas Scott Limited has no effect on the direction of Vodafone Idea i.e., Vodafone Idea and Thomas Scott go up and down completely randomly.

Pair Corralation between Vodafone Idea and Thomas Scott

Assuming the 90 days trading horizon Vodafone Idea Limited is expected to generate 1.06 times more return on investment than Thomas Scott. However, Vodafone Idea is 1.06 times more volatile than Thomas Scott Limited. It trades about 0.4 of its potential returns per unit of risk. Thomas Scott Limited is currently generating about -0.19 per unit of risk. If you would invest  740.00  in Vodafone Idea Limited on October 21, 2024 and sell it today you would earn a total of  171.00  from holding Vodafone Idea Limited or generate 23.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Vodafone Idea Limited  vs.  Thomas Scott Limited

Vodafone Idea Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vodafone Idea Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Vodafone Idea may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Thomas Scott Limited

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thomas Scott Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Thomas Scott exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vodafone Idea and Thomas Scott

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

The idea behind Vodafone Idea Limited and Thomas Scott 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.