Correlation Between VCI Global and Rentokil Initial

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

Diversification Opportunities for VCI Global and Rentokil Initial

0.19

Correlation Coefficient

VCI Global  Rentokil Initial

Average diversification

The 3 months correlation between VCI and Rentokil is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding VCI Global Limited and Rentokil Initial PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rentokil Initial PLC 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 Rentokil Initial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rentokil Initial PLC has no effect on the direction of VCI Global i.e., VCI Global and Rentokil Initial go up and down completely randomly.

Pair Corralation between VCI Global and Rentokil Initial

Given the investment horizon of 90 days VCI Global Limited is expected to under-perform the Rentokil Initial. In addition to that, VCI Global is 2.4 times more volatile than Rentokil Initial PLC. It trades about -0.18 of its total potential returns per unit of risk. Rentokil Initial PLC is currently generating about -0.21 per unit of volatility. If you would invest  2,519  in Rentokil Initial PLC on December 10, 2024 and sell it today you would lose (342.00) from holding Rentokil Initial PLC or give up 13.58% of portfolio value over 90 days.

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

VCI Global Limited  vs.  Rentokil Initial PLC

VCI Global Limited

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Rentokil Initial PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rentokil Initial PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with VCI Global and Rentokil Initial

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

The idea behind VCI Global Limited and Rentokil Initial PLC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.