Correlation Between Picomat Plastic and VTC Telecommunicatio

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

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

Diversification Opportunities for Picomat Plastic and VTC Telecommunicatio

0.61

Correlation Coefficient

Picomat Plastic  VTC Telecommunicatio

Poor diversification

The 3 months correlation between Picomat and VTC is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Picomat Plastic JSC and VTC Telecommunications JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VTC Telecommunications and Picomat Plastic 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 Picomat Plastic JSC are associated (or correlated) with VTC Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VTC Telecommunications has no effect on the direction of Picomat Plastic i.e., Picomat Plastic and VTC Telecommunicatio go up and down completely randomly.

Pair Corralation between Picomat Plastic and VTC Telecommunicatio

Assuming the 90 days trading horizon Picomat Plastic is expected to generate 2.06 times less return on investment than VTC Telecommunicatio. But when comparing it to its historical volatility, Picomat Plastic JSC is 1.69 times less risky than VTC Telecommunicatio. It trades about 0.1 of its potential returns per unit of risk. VTC Telecommunications JSC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  760,825  in VTC Telecommunications JSC on December 28, 2024 and sell it today you would earn a total of  139,175  from holding VTC Telecommunications JSC or generate 18.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.83%
Values	Daily Returns

Picomat Plastic JSC  vs.  VTC Telecommunications JSC

Picomat Plastic JSC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Picomat Plastic JSC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Picomat Plastic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

VTC Telecommunications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VTC Telecommunications JSC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, VTC Telecommunicatio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Picomat Plastic and VTC Telecommunicatio

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

The idea behind Picomat Plastic JSC and VTC Telecommunications JSC 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.