Correlation Between Versatile Creative and Scientex Packaging

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

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

Diversification Opportunities for Versatile Creative and Scientex Packaging

0.23

Correlation Coefficient

Versatile Creative  Scientex Packaging

Modest diversification

The 3 months correlation between Versatile and Scientex is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Creative Bhd and Scientex Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientex Packaging and Versatile Creative 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 Versatile Creative Bhd are associated (or correlated) with Scientex Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientex Packaging has no effect on the direction of Versatile Creative i.e., Versatile Creative and Scientex Packaging go up and down completely randomly.

Pair Corralation between Versatile Creative and Scientex Packaging

Assuming the 90 days trading horizon Versatile Creative Bhd is expected to generate 1.72 times more return on investment than Scientex Packaging. However, Versatile Creative is 1.72 times more volatile than Scientex Packaging. It trades about -0.06 of its potential returns per unit of risk. Scientex Packaging is currently generating about -0.14 per unit of risk. If you would invest  74.00  in Versatile Creative Bhd on September 26, 2024 and sell it today you would lose (4.00) from holding Versatile Creative Bhd or give up 5.41% of portfolio value over 90 days.

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

Versatile Creative Bhd  vs.  Scientex Packaging

Versatile Creative Bhd

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Versatile Creative Bhd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Versatile Creative may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Scientex Packaging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scientex Packaging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Scientex Packaging is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Versatile Creative and Scientex Packaging

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

The idea behind Versatile Creative Bhd and Scientex Packaging 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.