Correlation Between VIP Entertainment and Fredonia Mining

Can any of the company-specific risk be diversified away by investing in both VIP Entertainment and Fredonia Mining 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 Fredonia Mining 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 Fredonia Mining, you can compare the effects of market volatilities on VIP Entertainment and Fredonia Mining 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 Fredonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIP Entertainment and Fredonia Mining.

Diversification Opportunities for VIP Entertainment and Fredonia Mining

0.0

Correlation Coefficient

VIP Entertainment  Fredonia Mining

Pay attention - limited upside

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

Pair Corralation between VIP Entertainment and Fredonia Mining

Assuming the 90 days horizon VIP Entertainment Technologies is expected to under-perform the Fredonia Mining. But the stock apears to be less risky and, when comparing its historical volatility, VIP Entertainment Technologies is 1.04 times less risky than Fredonia Mining. The stock trades about -0.03 of its potential returns per unit of risk. The Fredonia Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  57.00  in Fredonia Mining on October 23, 2024 and sell it today you would lose (38.00) from holding Fredonia Mining or give up 66.67% of portfolio value over 90 days.

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

VIP Entertainment Technologies  vs.  Fredonia Mining

VIP Entertainment

Risk-Adjusted Performance

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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.

Fredonia Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fredonia Mining 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 fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with VIP Entertainment and Fredonia Mining

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

The idea behind VIP Entertainment Technologies and Fredonia Mining 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.