Correlation Between Insignia Financial and Viva Leisure

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

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

Diversification Opportunities for Insignia Financial and Viva Leisure

0.69

Correlation Coefficient

Insignia Financial  Viva Leisure

Poor diversification

The 3 months correlation between Insignia and Viva is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Insignia Financial and Viva Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viva Leisure and Insignia Financial 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 Insignia Financial are associated (or correlated) with Viva Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viva Leisure has no effect on the direction of Insignia Financial i.e., Insignia Financial and Viva Leisure go up and down completely randomly.

Pair Corralation between Insignia Financial and Viva Leisure

Assuming the 90 days trading horizon Insignia Financial is expected to generate 1.79 times less return on investment than Viva Leisure. In addition to that, Insignia Financial is 1.11 times more volatile than Viva Leisure. It trades about 0.02 of its total potential returns per unit of risk. Viva Leisure is currently generating about 0.04 per unit of volatility. If you would invest  109.00  in Viva Leisure on October 3, 2024 and sell it today you would earn a total of  36.00  from holding Viva Leisure or generate 33.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Insignia Financial  vs.  Viva Leisure

Insignia Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Insignia Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Insignia Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Viva Leisure

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Viva Leisure are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Viva Leisure may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Insignia Financial and Viva Leisure

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

The idea behind Insignia Financial and Viva Leisure 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.