Correlation Between Notion Vtec and Lyc Healthcare

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

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

Diversification Opportunities for Notion Vtec and Lyc Healthcare

0.73

Correlation Coefficient

Notion Vtec  Lyc Healthcare

Poor diversification

The 3 months correlation between Notion and Lyc is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Notion Vtec Bhd and Lyc Healthcare Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyc Healthcare Bhd and Notion Vtec 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 Notion Vtec Bhd are associated (or correlated) with Lyc Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyc Healthcare Bhd has no effect on the direction of Notion Vtec i.e., Notion Vtec and Lyc Healthcare go up and down completely randomly.

Pair Corralation between Notion Vtec and Lyc Healthcare

Assuming the 90 days trading horizon Notion Vtec Bhd is expected to generate 0.81 times more return on investment than Lyc Healthcare. However, Notion Vtec Bhd is 1.23 times less risky than Lyc Healthcare. It trades about 0.18 of its potential returns per unit of risk. Lyc Healthcare Bhd is currently generating about 0.08 per unit of risk. If you would invest  120.00  in Notion Vtec Bhd on September 28, 2024 and sell it today you would earn a total of  18.00  from holding Notion Vtec Bhd or generate 15.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Notion Vtec Bhd  vs.  Lyc Healthcare Bhd

Notion Vtec Bhd

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Notion Vtec Bhd are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Notion Vtec disclosed solid returns over the last few months and may actually be approaching a breakup point.

Lyc Healthcare Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lyc Healthcare Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Lyc Healthcare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Notion Vtec and Lyc Healthcare

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

The idea behind Notion Vtec Bhd and Lyc Healthcare Bhd 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.