Correlation Between VCI Global and Advantage Solutions
Can any of the company-specific risk be diversified away by investing in both VCI Global and Advantage Solutions 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 VCI Global and Advantage Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VCI Global Limited and Advantage Solutions, you can compare the effects of market volatilities on VCI Global and Advantage Solutions 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 VCI Global with a short position of Advantage Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of VCI Global and Advantage Solutions.
Diversification Opportunities for VCI Global and Advantage Solutions
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VCI and Advantage is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding VCI Global Limited and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions and VCI Global 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 VCI Global Limited are associated (or correlated) with Advantage Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Solutions has no effect on the direction of VCI Global i.e., VCI Global and Advantage Solutions go up and down completely randomly.
Pair Corralation between VCI Global and Advantage Solutions
Given the investment horizon of 90 days VCI Global Limited is expected to under-perform the Advantage Solutions. In addition to that, VCI Global is 1.54 times more volatile than Advantage Solutions. It trades about -0.04 of its total potential returns per unit of risk. Advantage Solutions is currently generating about 0.0 per unit of volatility. If you would invest 2.85 in Advantage Solutions on October 20, 2024 and sell it today you would lose (1.14) from holding Advantage Solutions or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.72% |
| Values | Daily Returns |
VCI Global Limited vs. Advantage Solutions
Performance |
| Timeline |
| VCI Global Limited |
| Advantage Solutions |
VCI Global and Advantage Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VCI Global and Advantage Solutions
The main advantage of trading using opposite VCI Global and Advantage Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VCI Global position performs unexpectedly, Advantage Solutions 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 Advantage Solutions will offset losses from the drop in Advantage Solutions' long position.| VCI Global vs. CRA International | VCI Global vs. ICF International | VCI Global vs. Forrester Research | VCI Global vs. Huron Consulting Group |
| Advantage Solutions vs. CannBioRx Life Sciences | Advantage Solutions vs. GCM Grosvenor | Advantage Solutions vs. CuriosityStream |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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