Correlation Between Vecima Networks and Cymbria

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

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

Diversification Opportunities for Vecima Networks and Cymbria

-0.76

Correlation Coefficient

Vecima Networks  Cymbria

Pay attention - limited upside

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

Pair Corralation between Vecima Networks and Cymbria

Assuming the 90 days trading horizon Vecima Networks is expected to under-perform the Cymbria. In addition to that, Vecima Networks is 1.92 times more volatile than Cymbria. It trades about -0.2 of its total potential returns per unit of risk. Cymbria is currently generating about 0.14 per unit of volatility. If you would invest  7,006  in Cymbria on September 12, 2024 and sell it today you would earn a total of  654.00  from holding Cymbria or generate 9.33% return on investment over 90 days.

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

Vecima Networks  vs.  Cymbria

Vecima Networks

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cymbria

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cymbria are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Cymbria may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vecima Networks and Cymbria

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

The idea behind Vecima Networks and Cymbria 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.