Correlation Between VTC Telecommunicatio and Van Dien

Can any of the company-specific risk be diversified away by investing in both VTC Telecommunicatio and Van Dien 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 Van Dien 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 Van Dien Fused, you can compare the effects of market volatilities on VTC Telecommunicatio and Van Dien 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 Van Dien. Check out your portfolio center. Please also check ongoing floating volatility patterns of VTC Telecommunicatio and Van Dien.

Diversification Opportunities for VTC Telecommunicatio and Van Dien

-0.57

Correlation Coefficient

VTC Telecommunicatio  Van Dien

Excellent diversification

The 3 months correlation between VTC and Van is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding VTC Telecommunications JSC and Van Dien Fused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van Dien Fused 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 Van Dien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van Dien Fused has no effect on the direction of VTC Telecommunicatio i.e., VTC Telecommunicatio and Van Dien go up and down completely randomly.

Pair Corralation between VTC Telecommunicatio and Van Dien

Assuming the 90 days trading horizon VTC Telecommunications JSC is expected to generate 0.86 times more return on investment than Van Dien. However, VTC Telecommunications JSC is 1.17 times less risky than Van Dien. It trades about 0.07 of its potential returns per unit of risk. Van Dien Fused is currently generating about -0.08 per unit of risk. If you would invest  800,000  in VTC Telecommunications JSC on March 28, 2025 and sell it today you would earn a total of  20,000  from holding VTC Telecommunications JSC or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.0%
Values	Daily Returns

VTC Telecommunications JSC  vs.  Van Dien Fused

VTC Telecommunications

Risk-Adjusted Performance

Very Weak

Over the last 90 days VTC Telecommunications JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Van Dien Fused

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Van Dien Fused are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Van Dien displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VTC Telecommunicatio and Van Dien

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

The idea behind VTC Telecommunications JSC and Van Dien Fused 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.