Correlation Between VIP Entertainment and Canadian Utilities

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

By analyzing existing cross correlation between VIP Entertainment Technologies and Canadian Utilities Limited, you can compare the effects of market volatilities on VIP Entertainment and Canadian Utilities 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 VIP Entertainment with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIP Entertainment and Canadian Utilities.

Diversification Opportunities for VIP Entertainment and Canadian Utilities

0.0

Correlation Coefficient

VIP Entertainment  Canadian Utilities

Pay attention - limited upside

The 3 months correlation between VIP and Canadian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VIP Entertainment Technologies and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and VIP Entertainment 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 VIP Entertainment Technologies are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of VIP Entertainment i.e., VIP Entertainment and Canadian Utilities go up and down completely randomly.

Pair Corralation between VIP Entertainment and Canadian Utilities

Assuming the 90 days horizon VIP Entertainment Technologies is expected to under-perform the Canadian Utilities. In addition to that, VIP Entertainment is 14.48 times more volatile than Canadian Utilities Limited. It trades about -0.05 of its total potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.19 per unit of volatility. If you would invest  2,905  in Canadian Utilities Limited on October 4, 2024 and sell it today you would earn a total of  580.00  from holding Canadian Utilities Limited or generate 19.97% return on investment over 90 days.

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

VIP Entertainment Technologies  vs.  Canadian Utilities Limited

VIP Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIP Entertainment Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, VIP Entertainment is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Canadian Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Utilities Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Canadian Utilities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with VIP Entertainment and Canadian Utilities

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

The idea behind VIP Entertainment Technologies and Canadian Utilities Limited 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.