Correlation Between Blue Coast and V2 Retail

Can any of the company-specific risk be diversified away by investing in both Blue Coast and V2 Retail 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 Blue Coast and V2 Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Coast Hotels and V2 Retail Limited, you can compare the effects of market volatilities on Blue Coast and V2 Retail 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 Blue Coast with a short position of V2 Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Coast and V2 Retail.

Diversification Opportunities for Blue Coast and V2 Retail

0.09

Correlation Coefficient

Blue Coast  V2 Retail

Significant diversification

The 3 months correlation between Blue and V2RETAIL is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Blue Coast Hotels and V2 Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V2 Retail Limited and Blue Coast 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 Blue Coast Hotels are associated (or correlated) with V2 Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V2 Retail Limited has no effect on the direction of Blue Coast i.e., Blue Coast and V2 Retail go up and down completely randomly.

Pair Corralation between Blue Coast and V2 Retail

Assuming the 90 days trading horizon Blue Coast Hotels is expected to generate 1.06 times more return on investment than V2 Retail. However, Blue Coast is 1.06 times more volatile than V2 Retail Limited. It trades about 0.06 of its potential returns per unit of risk. V2 Retail Limited is currently generating about 0.02 per unit of risk. If you would invest  3,160  in Blue Coast Hotels on April 24, 2025 and sell it today you would earn a total of  260.00  from holding Blue Coast Hotels or generate 8.23% return on investment over 90 days.

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

Blue Coast Hotels  vs.  V2 Retail Limited

Blue Coast Hotels

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Coast Hotels are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Blue Coast may actually be approaching a critical reversion point that can send shares even higher in August 2025.

V2 Retail Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in V2 Retail Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, V2 Retail is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Blue Coast and V2 Retail

The main advantage of trading using opposite Blue Coast and V2 Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Coast position performs unexpectedly, V2 Retail 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 V2 Retail will offset losses from the drop in V2 Retail's long position.

The idea behind Blue Coast Hotels and V2 Retail Limited 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.