Correlation Between VHAI and Technology Munications

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

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

Diversification Opportunities for VHAI and Technology Munications

-0.64

Correlation Coefficient

VHAI  Technology Munications

Excellent diversification

The 3 months correlation between VHAI and Technology is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and Technology Munications Portfol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Munications and VHAI 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 VHAI are associated (or correlated) with Technology Munications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Munications has no effect on the direction of VHAI i.e., VHAI and Technology Munications go up and down completely randomly.

Pair Corralation between VHAI and Technology Munications

Given the investment horizon of 90 days VHAI is expected to under-perform the Technology Munications. In addition to that, VHAI is 6.86 times more volatile than Technology Munications Portfolio. It trades about -0.04 of its total potential returns per unit of risk. Technology Munications Portfolio is currently generating about -0.02 per unit of volatility. If you would invest  2,194  in Technology Munications Portfolio on September 12, 2024 and sell it today you would lose (64.00) from holding Technology Munications Portfolio or give up 2.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	87.5%
Values	Daily Returns

VHAI  vs.  Technology Munications Portfol

VHAI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Technology Munications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Technology Munications Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Technology Munications is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VHAI and Technology Munications

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

The idea behind VHAI and Technology Munications Portfolio 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.