Correlation Between V Mart and Linc

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

Diversification Opportunities for V Mart and Linc

-0.23

Correlation Coefficient

V Mart  Linc

Very good diversification

The 3 months correlation between VMART and Linc is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding V Mart Retail Limited and Linc Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linc Limited 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 Linc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linc Limited has no effect on the direction of V Mart i.e., V Mart and Linc go up and down completely randomly.

Pair Corralation between V Mart and Linc

Assuming the 90 days trading horizon V Mart is expected to generate 19.22 times less return on investment than Linc. But when comparing it to its historical volatility, V Mart Retail Limited is 30.21 times less risky than Linc. It trades about 0.13 of its potential returns per unit of risk. Linc Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  14,544  in Linc Limited on October 9, 2024 and sell it today you would earn a total of  25.00  from holding Linc Limited or generate 0.17% return on investment over 90 days.

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

V Mart Retail Limited  vs.  Linc Limited

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 unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Linc Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Linc Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Linc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with V Mart and Linc

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

The idea behind V Mart Retail Limited and Linc 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.