Correlation Between VCI Global and Aeries Technology

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

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

Diversification Opportunities for VCI Global and Aeries Technology

0.59

Correlation Coefficient

VCI Global  Aeries Technology

Very weak diversification

The 3 months correlation between VCI and Aeries is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding VCI Global Limited and Aeries Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeries Technology and VCI Global 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 VCI Global Limited are associated (or correlated) with Aeries Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeries Technology has no effect on the direction of VCI Global i.e., VCI Global and Aeries Technology go up and down completely randomly.

Pair Corralation between VCI Global and Aeries Technology

Given the investment horizon of 90 days VCI Global Limited is expected to generate 1.66 times more return on investment than Aeries Technology. However, VCI Global is 1.66 times more volatile than Aeries Technology. It trades about 0.03 of its potential returns per unit of risk. Aeries Technology is currently generating about -0.04 per unit of risk. If you would invest  285.00  in VCI Global Limited on October 6, 2024 and sell it today you would lose (96.00) from holding VCI Global Limited or give up 33.68% of portfolio value over 90 days.

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

VCI Global Limited  vs.  Aeries Technology

VCI Global Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VCI Global Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Aeries Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeries Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with VCI Global and Aeries Technology

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

The idea behind VCI Global Limited and Aeries Technology 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.