Correlation Between VETIVA INDUSTRIAL and CORONATION INSURANCE

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

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

Diversification Opportunities for VETIVA INDUSTRIAL and CORONATION INSURANCE

-0.73

Correlation Coefficient

VETIVA INDUSTRIAL  CORONATION INSURANCE

Pay attention - limited upside

The 3 months correlation between VETIVA and CORONATION is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding VETIVA INDUSTRIAL ETF and CORONATION INSURANCE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CORONATION INSURANCE PLC and VETIVA INDUSTRIAL 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 INDUSTRIAL ETF are associated (or correlated) with CORONATION INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CORONATION INSURANCE PLC has no effect on the direction of VETIVA INDUSTRIAL i.e., VETIVA INDUSTRIAL and CORONATION INSURANCE go up and down completely randomly.

Pair Corralation between VETIVA INDUSTRIAL and CORONATION INSURANCE

Assuming the 90 days trading horizon VETIVA INDUSTRIAL ETF is expected to under-perform the CORONATION INSURANCE. But the stock apears to be less risky and, when comparing its historical volatility, VETIVA INDUSTRIAL ETF is 6.07 times less risky than CORONATION INSURANCE. The stock trades about -0.15 of its potential returns per unit of risk. The CORONATION INSURANCE PLC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  77.00  in CORONATION INSURANCE PLC on September 2, 2024 and sell it today you would earn a total of  26.00  from holding CORONATION INSURANCE PLC or generate 33.77% return on investment over 90 days.

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

VETIVA INDUSTRIAL ETF  vs.  CORONATION INSURANCE PLC

VETIVA INDUSTRIAL ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VETIVA INDUSTRIAL ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, VETIVA INDUSTRIAL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

CORONATION INSURANCE PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CORONATION INSURANCE PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, CORONATION INSURANCE showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VETIVA INDUSTRIAL and CORONATION INSURANCE

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

The idea behind VETIVA INDUSTRIAL ETF and CORONATION 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.