Correlation Between VTEX and CurrentC Power

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

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

Diversification Opportunities for VTEX and CurrentC Power

-0.2

Correlation Coefficient

VTEX  CurrentC Power

Good diversification

The 3 months correlation between VTEX and CurrentC is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding VTEX and CurrentC Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CurrentC Power and VTEX 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 VTEX are associated (or correlated) with CurrentC Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CurrentC Power has no effect on the direction of VTEX i.e., VTEX and CurrentC Power go up and down completely randomly.

Pair Corralation between VTEX and CurrentC Power

Given the investment horizon of 90 days VTEX is expected to under-perform the CurrentC Power. But the stock apears to be less risky and, when comparing its historical volatility, VTEX is 13.51 times less risky than CurrentC Power. The stock trades about -0.05 of its potential returns per unit of risk. The CurrentC Power is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  12.00  in CurrentC Power on September 2, 2024 and sell it today you would earn a total of  1.00  from holding CurrentC Power or generate 8.33% return on investment over 90 days.

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

VTEX  vs.  CurrentC Power

VTEX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VTEX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, VTEX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

CurrentC Power

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CurrentC Power are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, CurrentC Power showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VTEX and CurrentC Power

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

The idea behind VTEX and CurrentC Power 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.