Correlation Between Ontology and VINCI

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

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

Diversification Opportunities for Ontology and VINCI

0.08

Correlation Coefficient

Ontology  VINCI

Significant diversification

The 3 months correlation between Ontology and VINCI is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ontology and VINCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VINCI and Ontology 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 Ontology are associated (or correlated) with VINCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VINCI has no effect on the direction of Ontology i.e., Ontology and VINCI go up and down completely randomly.

Pair Corralation between Ontology and VINCI

Assuming the 90 days trading horizon Ontology is expected to under-perform the VINCI. In addition to that, Ontology is 3.2 times more volatile than VINCI. It trades about -0.05 of its total potential returns per unit of risk. VINCI is currently generating about -0.03 per unit of volatility. If you would invest  1,192  in VINCI on November 27, 2024 and sell it today you would lose (83.00) from holding VINCI or give up 6.96% of portfolio value over 90 days.

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

Ontology  vs.  VINCI

Ontology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ontology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for Ontology shareholders.

VINCI

Risk-Adjusted Performance

Very Weak

Over the last 90 days VINCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, VINCI is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ontology and VINCI

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

The idea behind Ontology and VINCI 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.