Correlation Between VCI Global and Liquidity Services

Can any of the company-specific risk be diversified away by investing in both VCI Global and Liquidity Services 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 VCI Global and Liquidity Services into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VCI Global Limited and Liquidity Services, you can compare the effects of market volatilities on VCI Global and Liquidity Services 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 VCI Global with a short position of Liquidity Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of VCI Global and Liquidity Services.

Diversification Opportunities for VCI Global and Liquidity Services

-0.68

Correlation Coefficient

VCI Global  Liquidity Services

Excellent diversification

The 3 months correlation between VCI and Liquidity is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding VCI Global Limited and Liquidity Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liquidity Services and VCI Global 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 VCI Global Limited are associated (or correlated) with Liquidity Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liquidity Services has no effect on the direction of VCI Global i.e., VCI Global and Liquidity Services go up and down completely randomly.

Pair Corralation between VCI Global and Liquidity Services

Given the investment horizon of 90 days VCI Global is expected to generate 1.54 times less return on investment than Liquidity Services. In addition to that, VCI Global is 11.18 times more volatile than Liquidity Services. It trades about 0.01 of its total potential returns per unit of risk. Liquidity Services is currently generating about 0.16 per unit of volatility. If you would invest  2,177  in Liquidity Services on August 30, 2024 and sell it today you would earn a total of  378.00  from holding Liquidity Services or generate 17.36% return on investment over 90 days.

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

VCI Global Limited  vs.  Liquidity Services

VCI Global Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VCI Global Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly inconsistent forward indicators, VCI Global may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Liquidity Services

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Liquidity Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Liquidity Services unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VCI Global and Liquidity Services

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

The idea behind VCI Global Limited and Liquidity Services 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.