Correlation Between VSE and Lucas GC

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

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

Diversification Opportunities for VSE and Lucas GC

-0.16

Correlation Coefficient

VSE  Lucas GC

Good diversification

The 3 months correlation between VSE and Lucas is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. and Lucas GC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucas GC Limited and VSE 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 VSE Corporation are associated (or correlated) with Lucas GC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucas GC Limited has no effect on the direction of VSE i.e., VSE and Lucas GC go up and down completely randomly.

Pair Corralation between VSE and Lucas GC

Given the investment horizon of 90 days VSE Corporation is expected to generate 0.47 times more return on investment than Lucas GC. However, VSE Corporation is 2.13 times less risky than Lucas GC. It trades about 0.14 of its potential returns per unit of risk. Lucas GC Limited is currently generating about 0.02 per unit of risk. If you would invest  9,672  in VSE Corporation on December 27, 2024 and sell it today you would earn a total of  2,635  from holding VSE Corporation or generate 27.24% return on investment over 90 days.

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

VSE Corp.  vs.  Lucas GC Limited

VSE Corporation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VSE Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, VSE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lucas GC Limited

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lucas GC Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Lucas GC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with VSE and Lucas GC

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

The idea behind VSE Corporation and Lucas GC 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.