Correlation Between SSIAM VNFIN and Idico JSC

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

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

Diversification Opportunities for SSIAM VNFIN and Idico JSC

-0.25

Correlation Coefficient

SSIAM VNFIN  Idico JSC

Very good diversification

The 3 months correlation between SSIAM and Idico is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SSIAM VNFIN LEAD and Idico JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idico JSC and SSIAM VNFIN 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 SSIAM VNFIN LEAD are associated (or correlated) with Idico JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idico JSC has no effect on the direction of SSIAM VNFIN i.e., SSIAM VNFIN and Idico JSC go up and down completely randomly.

Pair Corralation between SSIAM VNFIN and Idico JSC

Assuming the 90 days trading horizon SSIAM VNFIN LEAD is expected to generate 0.79 times more return on investment than Idico JSC. However, SSIAM VNFIN LEAD is 1.27 times less risky than Idico JSC. It trades about 0.04 of its potential returns per unit of risk. Idico JSC is currently generating about -0.09 per unit of risk. If you would invest  2,059,000  in SSIAM VNFIN LEAD on September 5, 2024 and sell it today you would earn a total of  41,000  from holding SSIAM VNFIN LEAD or generate 1.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

SSIAM VNFIN LEAD  vs.  Idico JSC

SSIAM VNFIN LEAD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SSIAM VNFIN LEAD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SSIAM VNFIN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Idico JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idico JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with SSIAM VNFIN and Idico JSC

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

The idea behind SSIAM VNFIN LEAD and Idico JSC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.