Correlation Between VictoryShares THB and Roundhill China

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

By analyzing existing cross correlation between VictoryShares THB Mid and Roundhill China Dragons, you can compare the effects of market volatilities on VictoryShares THB and Roundhill China 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 VictoryShares THB with a short position of Roundhill China. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares THB and Roundhill China.

Diversification Opportunities for VictoryShares THB and Roundhill China

-0.04

Correlation Coefficient

VictoryShares THB  Roundhill China

Good diversification

The 3 months correlation between VictoryShares and Roundhill is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares THB Mid and Roundhill China Dragons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill China Dragons and VictoryShares THB 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 VictoryShares THB Mid are associated (or correlated) with Roundhill China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill China Dragons has no effect on the direction of VictoryShares THB i.e., VictoryShares THB and Roundhill China go up and down completely randomly.

Pair Corralation between VictoryShares THB and Roundhill China

Given the investment horizon of 90 days VictoryShares THB Mid is expected to generate 0.33 times more return on investment than Roundhill China. However, VictoryShares THB Mid is 3.06 times less risky than Roundhill China. It trades about 0.16 of its potential returns per unit of risk. Roundhill China Dragons is currently generating about -0.14 per unit of risk. If you would invest  2,832  in VictoryShares THB Mid on September 4, 2024 and sell it today you would earn a total of  241.00  from holding VictoryShares THB Mid or generate 8.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.19%
Values	Daily Returns

VictoryShares THB Mid  vs.  Roundhill China Dragons

VictoryShares THB Mid

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares THB Mid are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, VictoryShares THB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Roundhill China Dragons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roundhill China Dragons has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Pair Trading with VictoryShares THB and Roundhill China

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

The idea behind VictoryShares THB Mid and Roundhill China Dragons 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.