Correlation Between Construction JSC and Vnsteel Vicasa

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

By analyzing existing cross correlation between Construction JSC No5 and Vnsteel Vicasa JSC, you can compare the effects of market volatilities on Construction JSC 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 Construction JSC with a short position of Vnsteel Vicasa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction JSC and Vnsteel Vicasa.

Diversification Opportunities for Construction JSC and Vnsteel Vicasa

0.47

Correlation Coefficient

Construction JSC  Vnsteel Vicasa

Very weak diversification

The 3 months correlation between Construction and Vnsteel is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Construction JSC No5 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 Construction JSC 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 Construction JSC No5 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 Construction JSC i.e., Construction JSC and Vnsteel Vicasa go up and down completely randomly.

Pair Corralation between Construction JSC and Vnsteel Vicasa

Assuming the 90 days trading horizon Construction JSC is expected to generate 3.34 times less return on investment than Vnsteel Vicasa. In addition to that, Construction JSC is 1.26 times more volatile than Vnsteel Vicasa JSC. It trades about 0.1 of its total potential returns per unit of risk. Vnsteel Vicasa JSC is currently generating about 0.43 per unit of volatility. If you would invest  870,000  in Vnsteel Vicasa JSC on September 15, 2024 and sell it today you would earn a total of  770,000  from holding Vnsteel Vicasa JSC or generate 88.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

Construction JSC No5  vs.  Vnsteel Vicasa JSC

Construction JSC No5

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Construction JSC No5 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Construction JSC displayed solid returns over the last few months and may actually be approaching a breakup point.

Vnsteel Vicasa JSC

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Vnsteel Vicasa JSC are ranked lower than 34 (%) 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 Construction JSC and Vnsteel Vicasa

The main advantage of trading using opposite Construction JSC and Vnsteel Vicasa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Construction JSC 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 Construction JSC No5 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.