Correlation Between Vg Life and ChitogenX

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

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

Diversification Opportunities for Vg Life and ChitogenX

0.2

Correlation Coefficient

Vg Life  ChitogenX

Modest diversification

The 3 months correlation between VGLS and ChitogenX is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Vg Life Sciences and ChitogenX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChitogenX and Vg Life 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 Vg Life Sciences are associated (or correlated) with ChitogenX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChitogenX has no effect on the direction of Vg Life i.e., Vg Life and ChitogenX go up and down completely randomly.

Pair Corralation between Vg Life and ChitogenX

Given the investment horizon of 90 days Vg Life Sciences is expected to under-perform the ChitogenX. In addition to that, Vg Life is 2.89 times more volatile than ChitogenX. It trades about -0.22 of its total potential returns per unit of risk. ChitogenX is currently generating about -0.21 per unit of volatility. If you would invest  1.10  in ChitogenX on December 2, 2024 and sell it today you would lose (0.39) from holding ChitogenX or give up 35.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Vg Life Sciences  vs.  ChitogenX

Vg Life Sciences

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vg Life Sciences are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, Vg Life unveiled solid returns over the last few months and may actually be approaching a breakup point.

ChitogenX

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ChitogenX are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ChitogenX reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vg Life and ChitogenX

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

The idea behind Vg Life Sciences and ChitogenX 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.