Correlation Between GeoVision and Vivotek

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

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

Diversification Opportunities for GeoVision and Vivotek

0.21

Correlation Coefficient

GeoVision  Vivotek

Modest diversification

The 3 months correlation between GeoVision and Vivotek is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding GeoVision and Vivotek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivotek and GeoVision 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 GeoVision are associated (or correlated) with Vivotek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivotek has no effect on the direction of GeoVision i.e., GeoVision and Vivotek go up and down completely randomly.

Pair Corralation between GeoVision and Vivotek

Assuming the 90 days trading horizon GeoVision is expected to under-perform the Vivotek. In addition to that, GeoVision is 1.13 times more volatile than Vivotek. It trades about -0.04 of its total potential returns per unit of risk. Vivotek is currently generating about -0.04 per unit of volatility. If you would invest  12,500  in Vivotek on September 30, 2024 and sell it today you would lose (750.00) from holding Vivotek or give up 6.0% of portfolio value over 90 days.

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

GeoVision  vs.  Vivotek

GeoVision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GeoVision has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, GeoVision is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Vivotek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vivotek has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Vivotek is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with GeoVision and Vivotek

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

The idea behind GeoVision and Vivotek 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.