Correlation Between VCI Global and Shift4 Payments

Can any of the company-specific risk be diversified away by investing in both VCI Global and Shift4 Payments 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 Shift4 Payments 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 Shift4 Payments, you can compare the effects of market volatilities on VCI Global and Shift4 Payments 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 Shift4 Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of VCI Global and Shift4 Payments.

Diversification Opportunities for VCI Global and Shift4 Payments

-0.73

Correlation Coefficient

VCI Global  Shift4 Payments

Pay attention - limited upside

The 3 months correlation between VCI and Shift4 is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding VCI Global Limited and Shift4 Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shift4 Payments 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 Shift4 Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shift4 Payments has no effect on the direction of VCI Global i.e., VCI Global and Shift4 Payments go up and down completely randomly.

Pair Corralation between VCI Global and Shift4 Payments

Given the investment horizon of 90 days VCI Global Limited is expected to generate 10.47 times more return on investment than Shift4 Payments. However, VCI Global is 10.47 times more volatile than Shift4 Payments. It trades about 0.02 of its potential returns per unit of risk. Shift4 Payments is currently generating about 0.07 per unit of risk. If you would invest  20,824  in VCI Global Limited on September 4, 2024 and sell it today you would lose (20,506) from holding VCI Global Limited or give up 98.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	83.64%
Values	Daily Returns

VCI Global Limited  vs.  Shift4 Payments

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 nearly stable forward indicators, VCI Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Shift4 Payments

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shift4 Payments are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Shift4 Payments reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VCI Global and Shift4 Payments

The main advantage of trading using opposite VCI Global and Shift4 Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VCI Global position performs unexpectedly, Shift4 Payments 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 Shift4 Payments will offset losses from the drop in Shift4 Payments' long position.

The idea behind VCI Global Limited and Shift4 Payments 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.