Correlation Between Telecoms Informatics and Vincom Retail

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

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

Diversification Opportunities for Telecoms Informatics and Vincom Retail

-0.69

Correlation Coefficient

Telecoms Informatics  Vincom Retail

Excellent diversification

The 3 months correlation between Telecoms and Vincom is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Telecoms Informatics JSC and Vincom Retail JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vincom Retail JSC and Telecoms Informatics 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 Telecoms Informatics JSC are associated (or correlated) with Vincom Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vincom Retail JSC has no effect on the direction of Telecoms Informatics i.e., Telecoms Informatics and Vincom Retail go up and down completely randomly.

Pair Corralation between Telecoms Informatics and Vincom Retail

Assuming the 90 days trading horizon Telecoms Informatics JSC is expected to generate 1.54 times more return on investment than Vincom Retail. However, Telecoms Informatics is 1.54 times more volatile than Vincom Retail JSC. It trades about 0.06 of its potential returns per unit of risk. Vincom Retail JSC is currently generating about -0.18 per unit of risk. If you would invest  1,185,000  in Telecoms Informatics JSC on September 17, 2024 and sell it today you would earn a total of  95,000  from holding Telecoms Informatics JSC or generate 8.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

Telecoms Informatics JSC  vs.  Vincom Retail JSC

Telecoms Informatics JSC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Telecoms Informatics JSC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Telecoms Informatics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vincom Retail JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vincom Retail JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Telecoms Informatics and Vincom Retail

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

The idea behind Telecoms Informatics JSC and Vincom Retail 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.