Correlation Between Solowin Holdings and Victory Capital

Can any of the company-specific risk be diversified away by investing in both Solowin Holdings and Victory Capital 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 Solowin Holdings and Victory Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solowin Holdings Ordinary and Victory Capital Holdings, you can compare the effects of market volatilities on Solowin Holdings and Victory Capital 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 Solowin Holdings with a short position of Victory Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solowin Holdings and Victory Capital.

Diversification Opportunities for Solowin Holdings and Victory Capital

-0.44

Correlation Coefficient

Solowin Holdings  Victory Capital

Very good diversification

The 3 months correlation between Solowin and Victory is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Solowin Holdings Ordinary and Victory Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Capital Holdings and Solowin Holdings 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 Solowin Holdings Ordinary are associated (or correlated) with Victory Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Capital Holdings has no effect on the direction of Solowin Holdings i.e., Solowin Holdings and Victory Capital go up and down completely randomly.

Pair Corralation between Solowin Holdings and Victory Capital

Given the investment horizon of 90 days Solowin Holdings is expected to generate 13.8 times less return on investment than Victory Capital. In addition to that, Solowin Holdings is 2.65 times more volatile than Victory Capital Holdings. It trades about 0.01 of its total potential returns per unit of risk. Victory Capital Holdings is currently generating about 0.22 per unit of volatility. If you would invest  5,150  in Victory Capital Holdings on September 5, 2024 and sell it today you would earn a total of  1,780  from holding Victory Capital Holdings or generate 34.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Solowin Holdings Ordinary  vs.  Victory Capital Holdings

Solowin Holdings Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

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

Victory Capital Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Capital Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Victory Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solowin Holdings and Victory Capital

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

The idea behind Solowin Holdings Ordinary and Victory Capital Holdings 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.