Correlation Between VitruLtd and Graham Holdings

Can any of the company-specific risk be diversified away by investing in both VitruLtd and Graham Holdings 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 VitruLtd and Graham Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VitruLtd and Graham Holdings Co, you can compare the effects of market volatilities on VitruLtd and Graham Holdings 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 VitruLtd with a short position of Graham Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of VitruLtd and Graham Holdings.

Diversification Opportunities for VitruLtd and Graham Holdings

0.48

Correlation Coefficient

VitruLtd  Graham Holdings

Very weak diversification

The 3 months correlation between VitruLtd and Graham is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding VitruLtd and Graham Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings and VitruLtd 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 VitruLtd are associated (or correlated) with Graham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings has no effect on the direction of VitruLtd i.e., VitruLtd and Graham Holdings go up and down completely randomly.

Pair Corralation between VitruLtd and Graham Holdings

Given the investment horizon of 90 days VitruLtd is expected to under-perform the Graham Holdings. In addition to that, VitruLtd is 1.88 times more volatile than Graham Holdings Co. It trades about -0.31 of its total potential returns per unit of risk. Graham Holdings Co is currently generating about -0.03 per unit of volatility. If you would invest  75,501  in Graham Holdings Co on February 7, 2024 and sell it today you would lose (961.00) from holding Graham Holdings Co or give up 1.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

VitruLtd  vs.  Graham Holdings Co

VitruLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VitruLtd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Graham Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, Graham Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with VitruLtd and Graham Holdings

The main advantage of trading using opposite VitruLtd and Graham Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VitruLtd position performs unexpectedly, Graham Holdings 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 Graham Holdings will offset losses from the drop in Graham Holdings' long position.

The idea behind VitruLtd and Graham Holdings Co 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.