Correlation Between V2 Retail and Kilitch Drugs

Can any of the company-specific risk be diversified away by investing in both V2 Retail and Kilitch Drugs 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 V2 Retail and Kilitch Drugs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between V2 Retail Limited and Kilitch Drugs Limited, you can compare the effects of market volatilities on V2 Retail and Kilitch Drugs 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 V2 Retail with a short position of Kilitch Drugs. Check out your portfolio center. Please also check ongoing floating volatility patterns of V2 Retail and Kilitch Drugs.

Diversification Opportunities for V2 Retail and Kilitch Drugs

0.0

Correlation Coefficient

V2 Retail  Kilitch Drugs

Pay attention - limited upside

The 3 months correlation between V2RETAIL and Kilitch is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding V2 Retail Limited and Kilitch Drugs Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kilitch Drugs Limited and V2 Retail 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 V2 Retail Limited are associated (or correlated) with Kilitch Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kilitch Drugs Limited has no effect on the direction of V2 Retail i.e., V2 Retail and Kilitch Drugs go up and down completely randomly.

Pair Corralation between V2 Retail and Kilitch Drugs

Assuming the 90 days trading horizon V2 Retail Limited is expected to generate 1.45 times more return on investment than Kilitch Drugs. However, V2 Retail is 1.45 times more volatile than Kilitch Drugs Limited. It trades about 0.14 of its potential returns per unit of risk. Kilitch Drugs Limited is currently generating about 0.02 per unit of risk. If you would invest  135,525  in V2 Retail Limited on November 28, 2024 and sell it today you would earn a total of  39,080  from holding V2 Retail Limited or generate 28.84% return on investment over 90 days.

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

V2 Retail Limited  vs.  Kilitch Drugs Limited

V2 Retail Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in V2 Retail Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, V2 Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Kilitch Drugs Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kilitch Drugs Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Kilitch Drugs is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with V2 Retail and Kilitch Drugs

The main advantage of trading using opposite V2 Retail and Kilitch Drugs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if V2 Retail position performs unexpectedly, Kilitch Drugs 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 Kilitch Drugs will offset losses from the drop in Kilitch Drugs' long position.

The idea behind V2 Retail Limited and Kilitch Drugs Limited 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 Transaction History module to view history of all your transactions and understand their impact on performance.