Correlation Between Indian Card and VIP Clothing

Can any of the company-specific risk be diversified away by investing in both Indian Card and VIP Clothing 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 Indian Card and VIP Clothing into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Indian Card and VIP Clothing

0.66

Correlation Coefficient

Indian Card  VIP Clothing

Poor diversification

The 3 months correlation between Indian and VIP is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Indian Card Clothing and VIP Clothing Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIP Clothing Limited and Indian Card 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 Indian Card Clothing are associated (or correlated) with VIP Clothing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIP Clothing Limited has no effect on the direction of Indian Card i.e., Indian Card and VIP Clothing go up and down completely randomly.

Pair Corralation between Indian Card and VIP Clothing

Assuming the 90 days trading horizon Indian Card Clothing is expected to generate 0.92 times more return on investment than VIP Clothing. However, Indian Card Clothing is 1.09 times less risky than VIP Clothing. It trades about 0.09 of its potential returns per unit of risk. VIP Clothing Limited is currently generating about 0.02 per unit of risk. If you would invest  23,180  in Indian Card Clothing on September 19, 2024 and sell it today you would earn a total of  18,130  from holding Indian Card Clothing or generate 78.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.3%
Values	Daily Returns

Indian Card Clothing  vs.  VIP Clothing Limited

Indian Card Clothing

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Indian Card Clothing are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Indian Card exhibited solid returns over the last few months and may actually be approaching a breakup point.

VIP Clothing Limited

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Indian Card and VIP Clothing

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

The idea behind Indian Card Clothing and VIP Clothing 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.