Correlation Between VTHO and VeChain

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

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

Diversification Opportunities for VTHO and VeChain

0.4

Correlation Coefficient

VTHO  VeChain

Very weak diversification

The 3 months correlation between VTHO and VeChain is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding VTHO and VeChain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VeChain and VTHO 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 VTHO are associated (or correlated) with VeChain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VeChain has no effect on the direction of VTHO i.e., VTHO and VeChain go up and down completely randomly.

Pair Corralation between VTHO and VeChain

Assuming the 90 days trading horizon VTHO is expected to generate 3.67 times more return on investment than VeChain. However, VTHO is 3.67 times more volatile than VeChain. It trades about 0.05 of its potential returns per unit of risk. VeChain is currently generating about -0.15 per unit of risk. If you would invest  0.25  in VTHO on December 30, 2024 and sell it today you would lose (0.03) from holding VTHO or give up 13.14% of portfolio value over 90 days.

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

VTHO  vs.  VeChain

VTHO

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VTHO are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, VTHO exhibited solid returns over the last few months and may actually be approaching a breakup point.

VeChain

Risk-Adjusted Performance

Very Weak

Over the last 90 days VeChain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for VeChain shareholders.

Pair Trading with VTHO and VeChain

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

The idea behind VTHO and VeChain 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 Commodity Directory module to find actively traded commodities issued by global exchanges.