Correlation Between VirnetX Holding and CiT

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

By analyzing existing cross correlation between VirnetX Holding Corp and CiT Inc, you can compare the effects of market volatilities on VirnetX Holding and CiT 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 VirnetX Holding with a short position of CiT. Check out your portfolio center. Please also check ongoing floating volatility patterns of VirnetX Holding and CiT.

Diversification Opportunities for VirnetX Holding and CiT

0.65

Correlation Coefficient

VirnetX Holding  CiT

Poor diversification

The 3 months correlation between VirnetX and CiT is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding VirnetX Holding Corp and CiT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CiT Inc and VirnetX Holding 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 VirnetX Holding Corp are associated (or correlated) with CiT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CiT Inc has no effect on the direction of VirnetX Holding i.e., VirnetX Holding and CiT go up and down completely randomly.

Pair Corralation between VirnetX Holding and CiT

Considering the 90-day investment horizon VirnetX Holding Corp is expected to generate 4.09 times more return on investment than CiT. However, VirnetX Holding is 4.09 times more volatile than CiT Inc. It trades about 0.11 of its potential returns per unit of risk. CiT Inc is currently generating about 0.02 per unit of risk. If you would invest  525.00  in VirnetX Holding Corp on December 27, 2024 and sell it today you would earn a total of  278.00  from holding VirnetX Holding Corp or generate 52.95% return on investment over 90 days.

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

VirnetX Holding Corp  vs.  CiT Inc

VirnetX Holding Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VirnetX Holding Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, VirnetX Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

CiT Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CiT Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CiT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VirnetX Holding and CiT

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

The idea behind VirnetX Holding Corp and CiT Inc 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.