Correlation Between VGI Public and Tropical Canning

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

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

Diversification Opportunities for VGI Public and Tropical Canning

-0.04

Correlation Coefficient

VGI Public  Tropical Canning

Good diversification

The 3 months correlation between VGI and Tropical is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding VGI Public and Tropical Canning Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tropical Canning Public and VGI Public 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 VGI Public are associated (or correlated) with Tropical Canning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tropical Canning Public has no effect on the direction of VGI Public i.e., VGI Public and Tropical Canning go up and down completely randomly.

Pair Corralation between VGI Public and Tropical Canning

Assuming the 90 days trading horizon VGI Public is expected to generate 0.87 times more return on investment than Tropical Canning. However, VGI Public is 1.15 times less risky than Tropical Canning. It trades about 0.22 of its potential returns per unit of risk. Tropical Canning Public is currently generating about 0.12 per unit of risk. If you would invest  286.00  in VGI Public on December 2, 2024 and sell it today you would earn a total of  24.00  from holding VGI Public or generate 8.39% return on investment over 90 days.

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

VGI Public  vs.  Tropical Canning Public

VGI Public

Risk-Adjusted Performance

OK

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

Tropical Canning Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tropical Canning Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Tropical Canning is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with VGI Public and Tropical Canning

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

The idea behind VGI Public and Tropical Canning Public 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 Global Correlations module to find global opportunities by holding instruments from different markets.