Correlation Between Risuntek and Vicor

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

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

Diversification Opportunities for Risuntek and Vicor

0.55

Correlation Coefficient

Risuntek  Vicor

Very weak diversification

The 3 months correlation between Risuntek and Vicor is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Risuntek and Vicor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicor and Risuntek 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 Risuntek are associated (or correlated) with Vicor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicor has no effect on the direction of Risuntek i.e., Risuntek and Vicor go up and down completely randomly.

Pair Corralation between Risuntek and Vicor

Assuming the 90 days trading horizon Risuntek is expected to generate 1.48 times less return on investment than Vicor. In addition to that, Risuntek is 1.14 times more volatile than Vicor. It trades about 0.11 of its total potential returns per unit of risk. Vicor is currently generating about 0.19 per unit of volatility. If you would invest  3,573  in Vicor on September 3, 2024 and sell it today you would earn a total of  1,748  from holding Vicor or generate 48.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.63%
Values	Daily Returns

Risuntek  vs.  Vicor

Risuntek

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Risuntek are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Risuntek sustained solid returns over the last few months and may actually be approaching a breakup point.

Vicor

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vicor are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental indicators, Vicor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Risuntek and Vicor

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

The idea behind Risuntek and Vicor 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.