Correlation Between VGI Public and SC Asset

Can any of the company-specific risk be diversified away by investing in both VGI Public and SC Asset 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 VGI Public and SC Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VGI Public and SC Asset, you can compare the effects of market volatilities on VGI Public and SC Asset 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 VGI Public with a short position of SC Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of VGI Public and SC Asset.

Diversification Opportunities for VGI Public and SC Asset

0.0

Correlation Coefficient

VGI Public  SC Asset

Pay attention - limited upside

The 3 months correlation between VGI and SC Asset is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VGI Public and SC Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SC Asset and VGI Public 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 VGI Public are associated (or correlated) with SC Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SC Asset has no effect on the direction of VGI Public i.e., VGI Public and SC Asset go up and down completely randomly.

Pair Corralation between VGI Public and SC Asset

Assuming the 90 days trading horizon VGI Public is expected to generate 2.62 times more return on investment than SC Asset. However, VGI Public is 2.62 times more volatile than SC Asset. It trades about 0.03 of its potential returns per unit of risk. SC Asset is currently generating about -0.01 per unit of risk. If you would invest  284.00  in VGI Public on September 15, 2024 and sell it today you would earn a total of  8.00  from holding VGI Public or generate 2.82% return on investment over 90 days.

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

VGI Public  vs.  SC Asset

VGI Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VGI Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, VGI Public may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SC Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SC Asset has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, SC Asset is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with VGI Public and SC Asset

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

The idea behind VGI Public and SC Asset 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.