Correlation Between INTERNATIONAL ENERGY and VFD GROUP

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

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

Diversification Opportunities for INTERNATIONAL ENERGY and VFD GROUP

0.22

Correlation Coefficient

INTERNATIONAL ENERGY  VFD GROUP

Modest diversification

The 3 months correlation between INTERNATIONAL and VFD is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding INTERNATIONAL ENERGY INSURANCE and VFD GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VFD GROUP and INTERNATIONAL 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 INTERNATIONAL ENERGY INSURANCE are associated (or correlated) with VFD GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VFD GROUP has no effect on the direction of INTERNATIONAL ENERGY i.e., INTERNATIONAL ENERGY and VFD GROUP go up and down completely randomly.

Pair Corralation between INTERNATIONAL ENERGY and VFD GROUP

Assuming the 90 days trading horizon INTERNATIONAL ENERGY INSURANCE is expected to under-perform the VFD GROUP. In addition to that, INTERNATIONAL ENERGY is 1.62 times more volatile than VFD GROUP. It trades about -0.03 of its total potential returns per unit of risk. VFD GROUP is currently generating about 0.0 per unit of volatility. If you would invest  4,500  in VFD GROUP on September 15, 2024 and sell it today you would lose (50.00) from holding VFD GROUP or give up 1.11% of portfolio value over 90 days.

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

INTERNATIONAL ENERGY INSURANCE  vs.  VFD GROUP

INTERNATIONAL ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

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

VFD GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VFD GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VFD GROUP is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with INTERNATIONAL ENERGY and VFD GROUP

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

The idea behind INTERNATIONAL ENERGY INSURANCE and VFD GROUP 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.