Correlation Between VETIVA INDUSTRIAL and GUINEA INSURANCE

Can any of the company-specific risk be diversified away by investing in both VETIVA INDUSTRIAL and GUINEA INSURANCE 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 VETIVA INDUSTRIAL and GUINEA INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VETIVA INDUSTRIAL ETF and GUINEA INSURANCE PLC, you can compare the effects of market volatilities on VETIVA INDUSTRIAL and GUINEA INSURANCE 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 VETIVA INDUSTRIAL with a short position of GUINEA INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of VETIVA INDUSTRIAL and GUINEA INSURANCE.

Diversification Opportunities for VETIVA INDUSTRIAL and GUINEA INSURANCE

-0.15

Correlation Coefficient

VETIVA INDUSTRIAL  GUINEA INSURANCE

Good diversification

The 3 months correlation between VETIVA and GUINEA is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding VETIVA INDUSTRIAL ETF and GUINEA INSURANCE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUINEA INSURANCE PLC and VETIVA INDUSTRIAL 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 VETIVA INDUSTRIAL ETF are associated (or correlated) with GUINEA INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUINEA INSURANCE PLC has no effect on the direction of VETIVA INDUSTRIAL i.e., VETIVA INDUSTRIAL and GUINEA INSURANCE go up and down completely randomly.

Pair Corralation between VETIVA INDUSTRIAL and GUINEA INSURANCE

Assuming the 90 days trading horizon VETIVA INDUSTRIAL ETF is expected to under-perform the GUINEA INSURANCE. But the stock apears to be less risky and, when comparing its historical volatility, VETIVA INDUSTRIAL ETF is 7.11 times less risky than GUINEA INSURANCE. The stock trades about -0.16 of its potential returns per unit of risk. The GUINEA INSURANCE PLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  47.00  in GUINEA INSURANCE PLC on September 14, 2024 and sell it today you would earn a total of  13.00  from holding GUINEA INSURANCE PLC or generate 27.66% return on investment over 90 days.

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

VETIVA INDUSTRIAL ETF  vs.  GUINEA INSURANCE PLC

VETIVA INDUSTRIAL ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VETIVA INDUSTRIAL ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

GUINEA INSURANCE PLC

Risk-Adjusted Performance

8 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GUINEA INSURANCE PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, GUINEA INSURANCE demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VETIVA INDUSTRIAL and GUINEA INSURANCE

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

The idea behind VETIVA INDUSTRIAL ETF and GUINEA INSURANCE PLC 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.