Correlation Between Vanguard Communication and Guinness Atkinson

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

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

Diversification Opportunities for Vanguard Communication and Guinness Atkinson

0.66

Correlation Coefficient

Vanguard Communication  Guinness Atkinson

Poor diversification

The 3 months correlation between Vanguard and Guinness is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Communication Service and Guinness Atkinson Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson Asset and Vanguard Communication 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 Vanguard Communication Services are associated (or correlated) with Guinness Atkinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guinness Atkinson Asset has no effect on the direction of Vanguard Communication i.e., Vanguard Communication and Guinness Atkinson go up and down completely randomly.

Pair Corralation between Vanguard Communication and Guinness Atkinson

Considering the 90-day investment horizon Vanguard Communication Services is expected to generate 1.05 times more return on investment than Guinness Atkinson. However, Vanguard Communication is 1.05 times more volatile than Guinness Atkinson Asset. It trades about 0.27 of its potential returns per unit of risk. Guinness Atkinson Asset is currently generating about 0.18 per unit of risk. If you would invest  13,977  in Vanguard Communication Services on September 16, 2024 and sell it today you would earn a total of  2,157  from holding Vanguard Communication Services or generate 15.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	55.38%
Values	Daily Returns

Vanguard Communication Service  vs.  Guinness Atkinson Asset

Vanguard Communication

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Communication Services are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Vanguard Communication showed solid returns over the last few months and may actually be approaching a breakup point.

Guinness Atkinson Asset

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Guinness Atkinson Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile basic indicators, Guinness Atkinson may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vanguard Communication and Guinness Atkinson

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

The idea behind Vanguard Communication Services and Guinness Atkinson 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.