Correlation Between Virtus Kar and Aim Investment

Can any of the company-specific risk be diversified away by investing in both Virtus Kar and Aim Investment 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 Aim Investment 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 Aim Investment Secs, you can compare the effects of market volatilities on Virtus Kar and Aim Investment 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 Aim Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Kar and Aim Investment.

Diversification Opportunities for Virtus Kar and Aim Investment

0.13

Correlation Coefficient

Virtus Kar  Aim Investment

Average diversification

The 3 months correlation between Virtus and Aim is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Mid Cap and Aim Investment Secs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Investment Secs 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 Aim Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Investment Secs has no effect on the direction of Virtus Kar i.e., Virtus Kar and Aim Investment go up and down completely randomly.

Pair Corralation between Virtus Kar and Aim Investment

Assuming the 90 days horizon Virtus Kar Mid Cap is expected to generate 13.06 times more return on investment than Aim Investment. However, Virtus Kar is 13.06 times more volatile than Aim Investment Secs. It trades about 0.03 of its potential returns per unit of risk. Aim Investment Secs is currently generating about 0.09 per unit of risk. If you would invest  5,941  in Virtus Kar Mid Cap on October 4, 2024 and sell it today you would earn a total of  253.00  from holding Virtus Kar Mid Cap or generate 4.26% return on investment over 90 days.

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

Virtus Kar Mid Cap  vs.  Aim Investment Secs

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 primary indicators, Virtus Kar is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aim Investment Secs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aim Investment Secs has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aim Investment 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 Aim Investment

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

The idea behind Virtus Kar Mid Cap and Aim Investment Secs 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.