Correlation Between VCI Global and Resources Connection

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

Diversification Opportunities for VCI Global and Resources Connection

-0.42

Correlation Coefficient

VCI Global  Resources Connection

Very good diversification

The 3 months correlation between VCI and Resources is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding VCI Global Limited and Resources Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resources Connection 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 Resources Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resources Connection has no effect on the direction of VCI Global i.e., VCI Global and Resources Connection go up and down completely randomly.

Pair Corralation between VCI Global and Resources Connection

Given the investment horizon of 90 days VCI Global Limited is expected to generate 15.22 times more return on investment than Resources Connection. However, VCI Global is 15.22 times more volatile than Resources Connection. It trades about 0.02 of its potential returns per unit of risk. Resources Connection is currently generating about -0.06 per unit of risk. If you would invest  20,824  in VCI Global Limited on October 24, 2024 and sell it today you would lose (20,696) from holding VCI Global Limited or give up 99.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.28%
Values	Daily Returns

VCI Global Limited  vs.  Resources Connection

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.

Resources Connection

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Resources Connection are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, Resources Connection may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with VCI Global and Resources Connection

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

The idea behind VCI Global Limited and Resources Connection 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.