Correlation Between V V and Poly Real

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

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

Diversification Opportunities for V V and Poly Real

0.81

Correlation Coefficient

V V  Poly Real

Very poor diversification

The 3 months correlation between 600300 and Poly is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding V V Food and Poly Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poly Real Estate and V V 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 V V Food are associated (or correlated) with Poly Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poly Real Estate has no effect on the direction of V V i.e., V V and Poly Real go up and down completely randomly.

Pair Corralation between V V and Poly Real

Assuming the 90 days trading horizon V V Food is expected to generate 0.75 times more return on investment than Poly Real. However, V V Food is 1.34 times less risky than Poly Real. It trades about 0.23 of its potential returns per unit of risk. Poly Real Estate is currently generating about 0.16 per unit of risk. If you would invest  236.00  in V V Food on September 5, 2024 and sell it today you would earn a total of  87.00  from holding V V Food or generate 36.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

V V Food  vs.  Poly Real Estate

V V Food

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in V V Food are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, V V sustained solid returns over the last few months and may actually be approaching a breakup point.

Poly Real Estate

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Poly Real Estate are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Poly Real sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with V V and Poly Real

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

The idea behind V V Food and Poly Real Estate 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.