Correlation Between V Mart and MIC Electronics
Can any of the company-specific risk be diversified away by investing in both V Mart and MIC Electronics 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 V Mart and MIC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between V Mart Retail Limited and MIC Electronics Limited, you can compare the effects of market volatilities on V Mart and MIC Electronics 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 V Mart with a short position of MIC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of V Mart and MIC Electronics.
Diversification Opportunities for V Mart and MIC Electronics
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between VMART and MIC is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding V Mart Retail Limited and MIC Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIC Electronics and V Mart 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 V Mart Retail Limited are associated (or correlated) with MIC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIC Electronics has no effect on the direction of V Mart i.e., V Mart and MIC Electronics go up and down completely randomly.
Pair Corralation between V Mart and MIC Electronics
Assuming the 90 days trading horizon V Mart is expected to generate 2.2 times less return on investment than MIC Electronics. But when comparing it to its historical volatility, V Mart Retail Limited is 1.53 times less risky than MIC Electronics. It trades about 0.1 of its potential returns per unit of risk. MIC Electronics Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,870 in MIC Electronics Limited on September 1, 2024 and sell it today you would earn a total of 6,528 from holding MIC Electronics Limited or generate 349.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
V Mart Retail Limited vs. MIC Electronics Limited
Performance |
| Timeline |
| V Mart Retail |
| MIC Electronics |
V Mart and MIC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with V Mart and MIC Electronics
The main advantage of trading using opposite V Mart and MIC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if V Mart position performs unexpectedly, MIC Electronics 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 MIC Electronics will offset losses from the drop in MIC Electronics' long position.| V Mart vs. Kingfa Science Technology | V Mart vs. Rico Auto Industries | V Mart vs. GACM Technologies Limited | V Mart vs. COSMO FIRST LIMITED |
| MIC Electronics vs. V2 Retail Limited | MIC Electronics vs. V Mart Retail Limited | MIC Electronics vs. Osia Hyper Retail | MIC Electronics vs. Praxis Home Retail |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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