Correlation Between VTEX and EGain

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

By analyzing existing cross correlation between VTEX and eGain, you can compare the effects of market volatilities on VTEX and EGain 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 EGain. Check out your portfolio center. Please also check ongoing floating volatility patterns of VTEX and EGain.

Diversification Opportunities for VTEX and EGain

-0.7

Correlation Coefficient

VTEX  EGain

Excellent diversification

The 3 months correlation between VTEX and EGain is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding VTEX and eGain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eGain 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 EGain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eGain has no effect on the direction of VTEX i.e., VTEX and EGain go up and down completely randomly.

Pair Corralation between VTEX and EGain

Given the investment horizon of 90 days VTEX is expected to generate 0.92 times more return on investment than EGain. However, VTEX is 1.08 times less risky than EGain. It trades about 0.04 of its potential returns per unit of risk. eGain is currently generating about -0.01 per unit of risk. If you would invest  437.00  in VTEX on October 3, 2024 and sell it today you would earn a total of  152.00  from holding VTEX or generate 34.78% return on investment over 90 days.

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

VTEX  vs.  eGain

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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

eGain

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in eGain are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, EGain displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VTEX and EGain

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

The idea behind VTEX and eGain 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.