Correlation Between VETIVA SUMER and GUINEA INSURANCE

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

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

Diversification Opportunities for VETIVA SUMER and GUINEA INSURANCE

-0.71

Correlation Coefficient

VETIVA SUMER  GUINEA INSURANCE

Pay attention - limited upside

The 3 months correlation between VETIVA and GUINEA is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding VETIVA SUMER GOODS and GUINEA INSURANCE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUINEA INSURANCE PLC and VETIVA SUMER 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 SUMER GOODS are associated (or correlated) with GUINEA INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUINEA INSURANCE PLC has no effect on the direction of VETIVA SUMER i.e., VETIVA SUMER and GUINEA INSURANCE go up and down completely randomly.

Pair Corralation between VETIVA SUMER and GUINEA INSURANCE

Assuming the 90 days trading horizon VETIVA SUMER GOODS is expected to generate 0.26 times more return on investment than GUINEA INSURANCE. However, VETIVA SUMER GOODS is 3.78 times less risky than GUINEA INSURANCE. It trades about 0.07 of its potential returns per unit of risk. GUINEA INSURANCE PLC is currently generating about 0.0 per unit of risk. If you would invest  1,700  in VETIVA SUMER GOODS on December 29, 2024 and sell it today you would earn a total of  100.00  from holding VETIVA SUMER GOODS or generate 5.88% return on investment over 90 days.

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

VETIVA SUMER GOODS  vs.  GUINEA INSURANCE PLC

VETIVA SUMER GOODS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VETIVA SUMER GOODS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, VETIVA SUMER may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GUINEA INSURANCE PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days GUINEA INSURANCE PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, GUINEA INSURANCE is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with VETIVA SUMER and GUINEA INSURANCE

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

The idea behind VETIVA SUMER GOODS and GUINEA INSURANCE 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.