Correlation Between VictoryShares THB and Democracy International

Can any of the company-specific risk be diversified away by investing in both VictoryShares THB and Democracy International 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 VictoryShares THB and Democracy International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VictoryShares THB Mid and Democracy International, you can compare the effects of market volatilities on VictoryShares THB and Democracy International 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 VictoryShares THB with a short position of Democracy International. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares THB and Democracy International.

Diversification Opportunities for VictoryShares THB and Democracy International

-0.51

Correlation Coefficient

VictoryShares THB  Democracy International

Excellent diversification

The 3 months correlation between VictoryShares and Democracy is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares THB Mid and Democracy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Democracy International and VictoryShares THB 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 VictoryShares THB Mid are associated (or correlated) with Democracy International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Democracy International has no effect on the direction of VictoryShares THB i.e., VictoryShares THB and Democracy International go up and down completely randomly.

Pair Corralation between VictoryShares THB and Democracy International

Given the investment horizon of 90 days VictoryShares THB Mid is expected to under-perform the Democracy International. In addition to that, VictoryShares THB is 1.12 times more volatile than Democracy International. It trades about -0.04 of its total potential returns per unit of risk. Democracy International is currently generating about 0.14 per unit of volatility. If you would invest  2,495  in Democracy International on December 25, 2024 and sell it today you would earn a total of  166.00  from holding Democracy International or generate 6.65% return on investment over 90 days.

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

VictoryShares THB Mid  vs.  Democracy International

VictoryShares THB Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days VictoryShares THB Mid has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, VictoryShares THB is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Democracy International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Democracy International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Democracy International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with VictoryShares THB and Democracy International

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

The idea behind VictoryShares THB Mid and Democracy International 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.