Correlation Between Virtual Medical and TransGlobal Assets

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

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

Diversification Opportunities for Virtual Medical and TransGlobal Assets

-0.33

Correlation Coefficient

Virtual Medical  TransGlobal Assets

Very good diversification

The 3 months correlation between Virtual and TransGlobal is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Virtual Medical International and TransGlobal Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransGlobal Assets and Virtual Medical 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 Virtual Medical International are associated (or correlated) with TransGlobal Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransGlobal Assets has no effect on the direction of Virtual Medical i.e., Virtual Medical and TransGlobal Assets go up and down completely randomly.

Pair Corralation between Virtual Medical and TransGlobal Assets

Given the investment horizon of 90 days Virtual Medical International is expected to generate 0.96 times more return on investment than TransGlobal Assets. However, Virtual Medical International is 1.05 times less risky than TransGlobal Assets. It trades about 0.12 of its potential returns per unit of risk. TransGlobal Assets is currently generating about 0.06 per unit of risk. If you would invest  0.01  in Virtual Medical International on September 3, 2024 and sell it today you would earn a total of  0.01  from holding Virtual Medical International or generate 100.0% return on investment over 90 days.

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

Virtual Medical International  vs.  TransGlobal Assets

Virtual Medical Inte

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtual Medical International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental drivers, Virtual Medical reported solid returns over the last few months and may actually be approaching a breakup point.

TransGlobal Assets

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TransGlobal Assets are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, TransGlobal Assets demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Virtual Medical and TransGlobal Assets

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

The idea behind Virtual Medical International and TransGlobal Assets 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.