Correlation Between Virtus Kar and OCBCSP

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

By analyzing existing cross correlation between Virtus Kar Mid Cap and OCBCSP 1832 10 SEP 30, you can compare the effects of market volatilities on Virtus Kar and OCBCSP 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 Virtus Kar with a short position of OCBCSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Kar and OCBCSP.

Diversification Opportunities for Virtus Kar and OCBCSP

0.7

Correlation Coefficient

Virtus Kar  OCBCSP

Poor diversification

The 3 months correlation between Virtus and OCBCSP is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Mid Cap and OCBCSP 1832 10 SEP 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCBCSP 1832 10 and Virtus Kar 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 Virtus Kar Mid Cap are associated (or correlated) with OCBCSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCBCSP 1832 10 has no effect on the direction of Virtus Kar i.e., Virtus Kar and OCBCSP go up and down completely randomly.

Pair Corralation between Virtus Kar and OCBCSP

Assuming the 90 days horizon Virtus Kar Mid Cap is expected to generate 1.26 times more return on investment than OCBCSP. However, Virtus Kar is 1.26 times more volatile than OCBCSP 1832 10 SEP 30. It trades about 0.06 of its potential returns per unit of risk. OCBCSP 1832 10 SEP 30 is currently generating about 0.0 per unit of risk. If you would invest  4,484  in Virtus Kar Mid Cap on September 22, 2024 and sell it today you would earn a total of  1,504  from holding Virtus Kar Mid Cap or generate 33.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	15.49%
Values	Daily Returns

Virtus Kar Mid Cap  vs.  OCBCSP 1832 10 SEP 30

Virtus Kar Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Kar Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Virtus Kar is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

OCBCSP 1832 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OCBCSP 1832 10 SEP 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, OCBCSP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Virtus Kar and OCBCSP

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

The idea behind Virtus Kar Mid Cap and OCBCSP 1832 10 SEP 30 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.