Correlation Between VICS and Vnsteel Vicasa

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

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

Diversification Opportunities for VICS and Vnsteel Vicasa

0.08

Correlation Coefficient

VICS  Vnsteel Vicasa

Significant diversification

The 3 months correlation between VICS and Vnsteel is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding VICS and Vnsteel Vicasa JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vnsteel Vicasa JSC and VICS 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 VICS are associated (or correlated) with Vnsteel Vicasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vnsteel Vicasa JSC has no effect on the direction of VICS i.e., VICS and Vnsteel Vicasa go up and down completely randomly.

Pair Corralation between VICS and Vnsteel Vicasa

Assuming the 90 days trading horizon VICS is expected to under-perform the Vnsteel Vicasa. But the stock apears to be less risky and, when comparing its historical volatility, VICS is 1.95 times less risky than Vnsteel Vicasa. The stock trades about -0.17 of its potential returns per unit of risk. The Vnsteel Vicasa JSC is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  857,000  in Vnsteel Vicasa JSC on September 5, 2024 and sell it today you would earn a total of  253,000  from holding Vnsteel Vicasa JSC or generate 29.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	56.25%
Values	Daily Returns

VICS  vs.  Vnsteel Vicasa JSC

VICS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VICS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Vnsteel Vicasa JSC

Risk-Adjusted Performance

18 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vnsteel Vicasa JSC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vnsteel Vicasa displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VICS and Vnsteel Vicasa

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

The idea behind VICS and Vnsteel Vicasa JSC 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.