Correlation Between POST TELECOMMU and Vnsteel Vicasa

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

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

Diversification Opportunities for POST TELECOMMU and Vnsteel Vicasa

0.35

Correlation Coefficient

POST TELECOMMU  Vnsteel Vicasa

Weak diversification

The 3 months correlation between POST and Vnsteel is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding POST TELECOMMU and Vnsteel Vicasa JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vnsteel Vicasa JSC and POST TELECOMMU 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 POST TELECOMMU are associated (or correlated) with Vnsteel Vicasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vnsteel Vicasa JSC has no effect on the direction of POST TELECOMMU i.e., POST TELECOMMU and Vnsteel Vicasa go up and down completely randomly.

Pair Corralation between POST TELECOMMU and Vnsteel Vicasa

Assuming the 90 days trading horizon POST TELECOMMU is expected to generate 5.2 times less return on investment than Vnsteel Vicasa. But when comparing it to its historical volatility, POST TELECOMMU is 1.35 times less risky than Vnsteel Vicasa. It trades about 0.02 of its potential returns per unit of risk. Vnsteel Vicasa JSC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  999,000  in Vnsteel Vicasa JSC on September 29, 2024 and sell it today you would earn a total of  221,000  from holding Vnsteel Vicasa JSC or generate 22.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	82.14%
Values	Daily Returns

POST TELECOMMU  vs.  Vnsteel Vicasa JSC

POST TELECOMMU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days POST TELECOMMU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, POST TELECOMMU is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Vnsteel Vicasa JSC

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vnsteel Vicasa JSC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vnsteel Vicasa displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with POST TELECOMMU and Vnsteel Vicasa

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

The idea behind POST TELECOMMU and Vnsteel Vicasa 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.