Correlation Between V Mart and Consolidated Construction

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

By analyzing existing cross correlation between V Mart Retail Limited and Consolidated Construction Consortium, you can compare the effects of market volatilities on V Mart and Consolidated Construction 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 V Mart with a short position of Consolidated Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of V Mart and Consolidated Construction.

Diversification Opportunities for V Mart and Consolidated Construction

0.51

Correlation Coefficient

V Mart  Consolidated Construction

Very weak diversification

The 3 months correlation between VMART and Consolidated is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding V Mart Retail Limited and Consolidated Construction Cons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Construction and V Mart 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 V Mart Retail Limited are associated (or correlated) with Consolidated Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Construction has no effect on the direction of V Mart i.e., V Mart and Consolidated Construction go up and down completely randomly.

Pair Corralation between V Mart and Consolidated Construction

Assuming the 90 days trading horizon V Mart Retail Limited is expected to generate 1.01 times more return on investment than Consolidated Construction. However, V Mart is 1.01 times more volatile than Consolidated Construction Consortium. It trades about -0.11 of its potential returns per unit of risk. Consolidated Construction Consortium is currently generating about -0.6 per unit of risk. If you would invest  399,930  in V Mart Retail Limited on October 1, 2024 and sell it today you would lose (15,250) from holding V Mart Retail Limited or give up 3.81% of portfolio value over 90 days.

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

V Mart Retail Limited  vs.  Consolidated Construction Cons

V Mart Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days V Mart Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Consolidated Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consolidated Construction Consortium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with V Mart and Consolidated Construction

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

The idea behind V Mart Retail Limited and Consolidated Construction Consortium 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.