Correlation Between VTC Telecommunicatio and SMC Investment

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

By analyzing existing cross correlation between VTC Telecommunications JSC and SMC Investment Trading, you can compare the effects of market volatilities on VTC Telecommunicatio and SMC Investment 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 VTC Telecommunicatio with a short position of SMC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of VTC Telecommunicatio and SMC Investment.

Diversification Opportunities for VTC Telecommunicatio and SMC Investment

0.41

Correlation Coefficient

VTC Telecommunicatio  SMC Investment

Very weak diversification

The 3 months correlation between VTC and SMC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding VTC Telecommunications JSC and SMC Investment Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Investment Trading and VTC Telecommunicatio 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 VTC Telecommunications JSC are associated (or correlated) with SMC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Investment Trading has no effect on the direction of VTC Telecommunicatio i.e., VTC Telecommunicatio and SMC Investment go up and down completely randomly.

Pair Corralation between VTC Telecommunicatio and SMC Investment

Assuming the 90 days trading horizon VTC Telecommunicatio is expected to generate 3.95 times less return on investment than SMC Investment. In addition to that, VTC Telecommunicatio is 1.2 times more volatile than SMC Investment Trading. It trades about 0.02 of its total potential returns per unit of risk. SMC Investment Trading is currently generating about 0.11 per unit of volatility. If you would invest  1,060,000  in SMC Investment Trading on May 20, 2025 and sell it today you would earn a total of  195,000  from holding SMC Investment Trading or generate 18.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	81.54%
Values	Daily Returns

VTC Telecommunications JSC  vs.  SMC Investment Trading

VTC Telecommunications

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VTC Telecommunications JSC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, VTC Telecommunicatio is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

SMC Investment Trading

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in SMC Investment Trading are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, SMC Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VTC Telecommunicatio and SMC Investment

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

The idea behind VTC Telecommunications JSC and SMC Investment Trading 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.