Correlation Between VGI Public and Sena Development

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Can any of the company-specific risk be diversified away by investing in both VGI Public and Sena Development 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 VGI Public and Sena Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VGI Public and Sena Development Public, you can compare the effects of market volatilities on VGI Public and Sena Development 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 VGI Public with a short position of Sena Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of VGI Public and Sena Development.

Diversification Opportunities for VGI Public and Sena Development

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between VGI and Sena is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding VGI Public and Sena Development Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sena Development Public and VGI Public 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 VGI Public are associated (or correlated) with Sena Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sena Development Public has no effect on the direction of VGI Public i.e., VGI Public and Sena Development go up and down completely randomly.

Pair Corralation between VGI Public and Sena Development

Assuming the 90 days trading horizon VGI Public is expected to generate 1.0 times more return on investment than Sena Development. However, VGI Public is 1.0 times more volatile than Sena Development Public. It trades about 0.04 of its potential returns per unit of risk. Sena Development Public is currently generating about 0.04 per unit of risk. If you would invest  404.00  in VGI Public on September 13, 2024 and sell it today you would lose (118.00) from holding VGI Public or give up 29.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

VGI Public  vs.  Sena Development Public

 Performance 
       Timeline  
VGI Public 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in VGI Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, VGI Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Sena Development Public 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sena Development Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sena Development is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

VGI Public and Sena Development Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VGI Public and Sena Development

The main advantage of trading using opposite VGI Public and Sena Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VGI Public position performs unexpectedly, Sena Development 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 Sena Development will offset losses from the drop in Sena Development's long position.
The idea behind VGI Public and Sena Development Public 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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