Correlation Between Victoria Insurance and Victoria Investama

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

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

Diversification Opportunities for Victoria Insurance and Victoria Investama

-0.7

Correlation Coefficient

Victoria Insurance  Victoria Investama

Excellent diversification

The 3 months correlation between Victoria and Victoria is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Victoria Insurance Tbk and Victoria Investama Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victoria Investama Tbk and Victoria Insurance 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 Victoria Insurance Tbk are associated (or correlated) with Victoria Investama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victoria Investama Tbk has no effect on the direction of Victoria Insurance i.e., Victoria Insurance and Victoria Investama go up and down completely randomly.

Pair Corralation between Victoria Insurance and Victoria Investama

Assuming the 90 days trading horizon Victoria Insurance Tbk is expected to under-perform the Victoria Investama. But the stock apears to be less risky and, when comparing its historical volatility, Victoria Insurance Tbk is 3.6 times less risky than Victoria Investama. The stock trades about -0.13 of its potential returns per unit of risk. The Victoria Investama Tbk is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  15,300  in Victoria Investama Tbk on September 15, 2024 and sell it today you would earn a total of  4,700  from holding Victoria Investama Tbk or generate 30.72% return on investment over 90 days.

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

Victoria Insurance Tbk  vs.  Victoria Investama Tbk

Victoria Insurance Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victoria Insurance Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Victoria Investama Tbk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Victoria Investama Tbk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Victoria Investama disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Victoria Insurance and Victoria Investama

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

The idea behind Victoria Insurance Tbk and Victoria Investama Tbk 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.