Correlation Between VIP Clothing and Healthcare Global

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

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

Diversification Opportunities for VIP Clothing and Healthcare Global

0.58

Correlation Coefficient

VIP Clothing  Healthcare Global

Very weak diversification

The 3 months correlation between VIP and Healthcare is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding VIP Clothing Limited and Healthcare Global Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Global and VIP Clothing 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 Clothing Limited are associated (or correlated) with Healthcare Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Global has no effect on the direction of VIP Clothing i.e., VIP Clothing and Healthcare Global go up and down completely randomly.

Pair Corralation between VIP Clothing and Healthcare Global

Assuming the 90 days trading horizon VIP Clothing is expected to generate 2.94 times less return on investment than Healthcare Global. In addition to that, VIP Clothing is 1.45 times more volatile than Healthcare Global Enterprises. It trades about 0.03 of its total potential returns per unit of risk. Healthcare Global Enterprises is currently generating about 0.15 per unit of volatility. If you would invest  42,815  in Healthcare Global Enterprises on October 25, 2024 and sell it today you would earn a total of  8,635  from holding Healthcare Global Enterprises or generate 20.17% return on investment over 90 days.

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

VIP Clothing Limited  vs.  Healthcare Global Enterprises

VIP Clothing Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VIP Clothing Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical indicators, VIP Clothing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Healthcare Global

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Global Enterprises are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Healthcare Global exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VIP Clothing and Healthcare Global

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

The idea behind VIP Clothing Limited and Healthcare Global Enterprises 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.