Correlation Between VIP Clothing and Ajooni Biotech

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

Diversification Opportunities for VIP Clothing and Ajooni Biotech

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between VIP and Ajooni is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding VIP Clothing Limited and Ajooni Biotech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ajooni Biotech and VIP Clothing 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 VIP Clothing Limited are associated (or correlated) with Ajooni Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ajooni Biotech has no effect on the direction of VIP Clothing i.e., VIP Clothing and Ajooni Biotech go up and down completely randomly.

Pair Corralation between VIP Clothing and Ajooni Biotech

Assuming the 90 days trading horizon VIP Clothing is expected to generate 42.11 times less return on investment than Ajooni Biotech. But when comparing it to its historical volatility, VIP Clothing Limited is 1.34 times less risky than Ajooni Biotech. It trades about 0.0 of its potential returns per unit of risk. Ajooni Biotech Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  705.00  in Ajooni Biotech Limited on September 3, 2024 and sell it today you would earn a total of  52.00  from holding Ajooni Biotech Limited or generate 7.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.59%
ValuesDaily Returns

VIP Clothing Limited  vs.  Ajooni Biotech Limited

 Performance 
       Timeline  
VIP Clothing Limited 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in VIP Clothing Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, VIP Clothing is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Ajooni Biotech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ajooni Biotech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

VIP Clothing and Ajooni Biotech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VIP Clothing and Ajooni Biotech

The main advantage of trading using opposite VIP Clothing and Ajooni Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIP Clothing position performs unexpectedly, Ajooni Biotech 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 Ajooni Biotech will offset losses from the drop in Ajooni Biotech's long position.
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The idea behind VIP Clothing Limited and Ajooni Biotech Limited 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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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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