Correlation Between Veltex and IMAC Holdings

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

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

Diversification Opportunities for Veltex and IMAC Holdings

0.52

Correlation Coefficient

Veltex  IMAC Holdings

Very weak diversification

The 3 months correlation between Veltex and IMAC is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Veltex and IMAC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMAC Holdings and Veltex 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 Veltex are associated (or correlated) with IMAC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMAC Holdings has no effect on the direction of Veltex i.e., Veltex and IMAC Holdings go up and down completely randomly.

Pair Corralation between Veltex and IMAC Holdings

Given the investment horizon of 90 days Veltex is expected to generate 1.73 times more return on investment than IMAC Holdings. However, Veltex is 1.73 times more volatile than IMAC Holdings. It trades about 0.15 of its potential returns per unit of risk. IMAC Holdings is currently generating about 0.16 per unit of risk. If you would invest  7.16  in Veltex on September 23, 2024 and sell it today you would earn a total of  1.21  from holding Veltex or generate 16.9% return on investment over 90 days.

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

Veltex  vs.  IMAC Holdings

Veltex

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Veltex are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Veltex exhibited solid returns over the last few months and may actually be approaching a breakup point.

IMAC Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IMAC Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, IMAC Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veltex and IMAC Holdings

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

The idea behind Veltex and IMAC Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.