Correlation Between VCI Global and Waste Management

Can any of the company-specific risk be diversified away by investing in both VCI Global and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on VCI Global and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of VCI Global and Waste Management.

Diversification Opportunities for VCI Global and Waste Management

-0.82

Correlation Coefficient

VCI Global  Waste Management

Pay attention - limited upside

The 3 months correlation between VCI and Waste is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding VCI Global Limited and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of VCI Global i.e., VCI Global and Waste Management go up and down completely randomly.

Pair Corralation between VCI Global and Waste Management

Given the investment horizon of 90 days VCI Global Limited is expected to generate 27.8 times more return on investment than Waste Management. However, VCI Global is 27.8 times more volatile than Waste Management. It trades about 0.02 of its potential returns per unit of risk. Waste Management is currently generating about 0.07 per unit of risk. If you would invest  20,824  in VCI Global Limited on August 30, 2024 and sell it today you would lose (20,414) from holding VCI Global Limited or give up 98.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	83.03%
Values	Daily Returns

VCI Global Limited  vs.  Waste Management

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.

Waste Management

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile primary indicators, Waste Management may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with VCI Global and Waste Management

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

The idea behind VCI Global Limited and Waste Management 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.