Correlation Between VTC Telecommunicatio and Investment

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

By analyzing existing cross correlation between VTC Telecommunications JSC and Investment and Industrial, you can compare the effects of market volatilities on VTC Telecommunicatio and Investment 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 VTC Telecommunicatio with a short position of Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of VTC Telecommunicatio and Investment.

Diversification Opportunities for VTC Telecommunicatio and Investment

0.74

Correlation Coefficient

VTC Telecommunicatio  Investment

Poor diversification

The 3 months correlation between VTC and Investment is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding VTC Telecommunications JSC and Investment and Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment and Industrial and VTC Telecommunicatio 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 VTC Telecommunications JSC are associated (or correlated) with Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment and Industrial has no effect on the direction of VTC Telecommunicatio i.e., VTC Telecommunicatio and Investment go up and down completely randomly.

Pair Corralation between VTC Telecommunicatio and Investment

Assuming the 90 days trading horizon VTC Telecommunications JSC is expected to generate 1.84 times more return on investment than Investment. However, VTC Telecommunicatio is 1.84 times more volatile than Investment and Industrial. It trades about 0.1 of its potential returns per unit of risk. Investment and Industrial is currently generating about 0.16 per unit of risk. If you would invest  850,000  in VTC Telecommunications JSC on December 23, 2024 and sell it today you would earn a total of  120,000  from holding VTC Telecommunications JSC or generate 14.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.33%
Values	Daily Returns

VTC Telecommunications JSC  vs.  Investment and Industrial

VTC Telecommunications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VTC Telecommunications JSC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, VTC Telecommunicatio displayed solid returns over the last few months and may actually be approaching a breakup point.

Investment and Industrial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investment and Industrial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VTC Telecommunicatio and Investment

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

The idea behind VTC Telecommunications JSC and Investment and Industrial 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.