Correlation Between SGS SA and VirnetX Holding

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

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

Diversification Opportunities for SGS SA and VirnetX Holding

0.09

Correlation Coefficient

SGS SA  VirnetX Holding

Significant diversification

The 3 months correlation between SGS and VirnetX is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SGS SA and VirnetX Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VirnetX Holding Corp and SGS SA 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 SGS SA are associated (or correlated) with VirnetX Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VirnetX Holding Corp has no effect on the direction of SGS SA i.e., SGS SA and VirnetX Holding go up and down completely randomly.

Pair Corralation between SGS SA and VirnetX Holding

Assuming the 90 days horizon SGS SA is expected to under-perform the VirnetX Holding. But the pink sheet apears to be less risky and, when comparing its historical volatility, SGS SA is 4.74 times less risky than VirnetX Holding. The pink sheet trades about 0.0 of its potential returns per unit of risk. The VirnetX Holding Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  525.00  in VirnetX Holding Corp on December 27, 2024 and sell it today you would earn a total of  260.00  from holding VirnetX Holding Corp or generate 49.52% return on investment over 90 days.

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

SGS SA  vs.  VirnetX Holding Corp

SGS SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days SGS SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SGS SA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

VirnetX Holding Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VirnetX Holding Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, VirnetX Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SGS SA and VirnetX Holding

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

The idea behind SGS SA and VirnetX Holding Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.