Correlation Between VETIVA BANKING and CHAMPION BREWERIES

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

By analyzing existing cross correlation between VETIVA BANKING ETF and CHAMPION BREWERIES PLC, you can compare the effects of market volatilities on VETIVA BANKING and CHAMPION BREWERIES 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 VETIVA BANKING with a short position of CHAMPION BREWERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of VETIVA BANKING and CHAMPION BREWERIES.

Diversification Opportunities for VETIVA BANKING and CHAMPION BREWERIES

0.75

Correlation Coefficient

VETIVA BANKING  CHAMPION BREWERIES

Poor diversification

The 3 months correlation between VETIVA and CHAMPION is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding VETIVA BANKING ETF and CHAMPION BREWERIES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAMPION BREWERIES PLC and VETIVA BANKING 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 VETIVA BANKING ETF are associated (or correlated) with CHAMPION BREWERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAMPION BREWERIES PLC has no effect on the direction of VETIVA BANKING i.e., VETIVA BANKING and CHAMPION BREWERIES go up and down completely randomly.

Pair Corralation between VETIVA BANKING and CHAMPION BREWERIES

Assuming the 90 days trading horizon VETIVA BANKING ETF is expected to generate 0.31 times more return on investment than CHAMPION BREWERIES. However, VETIVA BANKING ETF is 3.19 times less risky than CHAMPION BREWERIES. It trades about 0.29 of its potential returns per unit of risk. CHAMPION BREWERIES PLC is currently generating about 0.08 per unit of risk. If you would invest  1,020  in VETIVA BANKING ETF on October 6, 2024 and sell it today you would earn a total of  70.00  from holding VETIVA BANKING ETF or generate 6.86% return on investment over 90 days.

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

VETIVA BANKING ETF  vs.  CHAMPION BREWERIES PLC

VETIVA BANKING ETF

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VETIVA BANKING ETF are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, VETIVA BANKING disclosed solid returns over the last few months and may actually be approaching a breakup point.

CHAMPION BREWERIES PLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CHAMPION BREWERIES PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, CHAMPION BREWERIES displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VETIVA BANKING and CHAMPION BREWERIES

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

The idea behind VETIVA BANKING ETF and CHAMPION BREWERIES 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.