Correlation Between VSE and Steel Connect
Can any of the company-specific risk be diversified away by investing in both VSE and Steel Connect 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 VSE and Steel Connect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VSE Corporation and Steel Connect, you can compare the effects of market volatilities on VSE and Steel Connect 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 VSE with a short position of Steel Connect. Check out your portfolio center. Please also check ongoing floating volatility patterns of VSE and Steel Connect.
Diversification Opportunities for VSE and Steel Connect
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VSE and Steel is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. and Steel Connect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Connect and VSE 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 VSE Corporation are associated (or correlated) with Steel Connect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Connect has no effect on the direction of VSE i.e., VSE and Steel Connect go up and down completely randomly.
Pair Corralation between VSE and Steel Connect
Given the investment horizon of 90 days VSE Corporation is expected to generate 0.79 times more return on investment than Steel Connect. However, VSE Corporation is 1.27 times less risky than Steel Connect. It trades about 0.12 of its potential returns per unit of risk. Steel Connect is currently generating about 0.04 per unit of risk. If you would invest 6,088 in VSE Corporation on September 4, 2024 and sell it today you would earn a total of 5,405 from holding VSE Corporation or generate 88.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VSE Corp. vs. Steel Connect
Performance |
| Timeline |
| VSE Corporation |
| Steel Connect |
VSE and Steel Connect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VSE and Steel Connect
The main advantage of trading using opposite VSE and Steel Connect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VSE position performs unexpectedly, Steel Connect 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 Steel Connect will offset losses from the drop in Steel Connect's long position.The idea behind VSE Corporation and Steel Connect 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.| Steel Connect vs. Baosheng Media Group | Steel Connect vs. Impact Fusion International | Steel Connect vs. Mirriad Advertising plc | Steel Connect vs. CyberAgent ADR |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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