Correlation Between VCI Global and Industrials Portfolio

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

Diversification Opportunities for VCI Global and Industrials Portfolio

-0.76

Correlation Coefficient

VCI Global  Industrials Portfolio

Pay attention - limited upside

The 3 months correlation between VCI and Industrials is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding VCI Global Limited and Industrials Portfolio Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrials Portfolio 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 Industrials Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrials Portfolio has no effect on the direction of VCI Global i.e., VCI Global and Industrials Portfolio go up and down completely randomly.

Pair Corralation between VCI Global and Industrials Portfolio

Given the investment horizon of 90 days VCI Global Limited is expected to generate 17.86 times more return on investment than Industrials Portfolio. However, VCI Global is 17.86 times more volatile than Industrials Portfolio Industrials. It trades about 0.03 of its potential returns per unit of risk. Industrials Portfolio Industrials is currently generating about 0.23 per unit of risk. If you would invest  696.00  in VCI Global Limited on September 2, 2024 and sell it today you would lose (257.00) from holding VCI Global Limited or give up 36.93% of portfolio value over 90 days.

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

VCI Global Limited  vs.  Industrials Portfolio Industri

VCI Global Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VCI Global Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, VCI Global reported solid returns over the last few months and may actually be approaching a breakup point.

Industrials Portfolio

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Industrials Portfolio Industrials are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Industrials Portfolio showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VCI Global and Industrials Portfolio

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

The idea behind VCI Global Limited and Industrials Portfolio Industrials 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.