Correlation Between Vicinity and First Hydrogen
Can any of the company-specific risk be diversified away by investing in both Vicinity and First Hydrogen 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 Vicinity and First Hydrogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vicinity Motor Corp and First Hydrogen Corp, you can compare the effects of market volatilities on Vicinity and First Hydrogen 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 Vicinity with a short position of First Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vicinity and First Hydrogen.
Diversification Opportunities for Vicinity and First Hydrogen
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vicinity and First is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vicinity Motor Corp and First Hydrogen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hydrogen Corp and Vicinity 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 Vicinity Motor Corp are associated (or correlated) with First Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hydrogen Corp has no effect on the direction of Vicinity i.e., Vicinity and First Hydrogen go up and down completely randomly.
Pair Corralation between Vicinity and First Hydrogen
Considering the 90-day investment horizon Vicinity Motor Corp is expected to under-perform the First Hydrogen. In addition to that, Vicinity is 5.54 times more volatile than First Hydrogen Corp. It trades about -0.16 of its total potential returns per unit of risk. First Hydrogen Corp is currently generating about -0.24 per unit of volatility. If you would invest 30.00 in First Hydrogen Corp on August 31, 2024 and sell it today you would lose (7.00) from holding First Hydrogen Corp or give up 23.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vicinity Motor Corp vs. First Hydrogen Corp
Performance |
| Timeline |
| Vicinity Motor Corp |
| First Hydrogen Corp |
Vicinity and First Hydrogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vicinity and First Hydrogen
The main advantage of trading using opposite Vicinity and First Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vicinity position performs unexpectedly, First Hydrogen 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 First Hydrogen will offset losses from the drop in First Hydrogen's long position.| Vicinity vs. Blue Bird Corp | Vicinity vs. AYRO Inc | Vicinity vs. BAIC Motor | Vicinity vs. Zapp Electric Vehicles |
| First Hydrogen vs. BAIC Motor | First Hydrogen vs. Zapp Electric Vehicles | First Hydrogen vs. Guangzhou Automobile Group | First Hydrogen vs. Phoenix Motor Common |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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