Correlation Between VentureNet Capital and Pond Technologies

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

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

Diversification Opportunities for VentureNet Capital and Pond Technologies

-0.55

Correlation Coefficient

VentureNet Capital  Pond Technologies

Excellent diversification

The 3 months correlation between VentureNet and Pond is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding VentureNet Capital Group and Pond Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pond Technologies and VentureNet Capital 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 VentureNet Capital Group are associated (or correlated) with Pond Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pond Technologies has no effect on the direction of VentureNet Capital i.e., VentureNet Capital and Pond Technologies go up and down completely randomly.

Pair Corralation between VentureNet Capital and Pond Technologies

Given the investment horizon of 90 days VentureNet Capital Group is expected to generate 19.09 times more return on investment than Pond Technologies. However, VentureNet Capital is 19.09 times more volatile than Pond Technologies Holdings. It trades about 0.19 of its potential returns per unit of risk. Pond Technologies Holdings is currently generating about -0.2 per unit of risk. If you would invest  0.01  in VentureNet Capital Group on October 25, 2024 and sell it today you would lose  0.00  from holding VentureNet Capital Group or give up 0.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

VentureNet Capital Group  vs.  Pond Technologies Holdings

VentureNet Capital

Risk-Adjusted Performance

8 of 100

OK

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

Pond Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pond Technologies Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Pond Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VentureNet Capital and Pond Technologies

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

The idea behind VentureNet Capital Group and Pond Technologies 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.