Correlation Between ESGL Holdings and Vivic Corp

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

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

Diversification Opportunities for ESGL Holdings and Vivic Corp

-0.42

Correlation Coefficient

ESGL Holdings  Vivic Corp

Very good diversification

The 3 months correlation between ESGL and Vivic is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ESGL Holdings Limited and Vivic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivic Corp and ESGL Holdings 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 ESGL Holdings Limited are associated (or correlated) with Vivic Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivic Corp has no effect on the direction of ESGL Holdings i.e., ESGL Holdings and Vivic Corp go up and down completely randomly.

Pair Corralation between ESGL Holdings and Vivic Corp

Assuming the 90 days horizon ESGL Holdings Limited is expected to generate 1.17 times more return on investment than Vivic Corp. However, ESGL Holdings is 1.17 times more volatile than Vivic Corp. It trades about 0.12 of its potential returns per unit of risk. Vivic Corp is currently generating about 0.11 per unit of risk. If you would invest  1.10  in ESGL Holdings Limited on September 28, 2024 and sell it today you would earn a total of  0.50  from holding ESGL Holdings Limited or generate 45.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.65%
Values	Daily Returns

ESGL Holdings Limited  vs.  Vivic Corp

ESGL Holdings Limited

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days ESGL Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly fragile essential indicators, ESGL Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Vivic Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vivic Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Vivic Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ESGL Holdings and Vivic Corp

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

The idea behind ESGL Holdings Limited and Vivic Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.