Correlation Between Videolocity International and MACOM Technology

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

By analyzing existing cross correlation between Videolocity International and MACOM Technology Solutions, you can compare the effects of market volatilities on Videolocity International and MACOM Technology 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 Videolocity International with a short position of MACOM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Videolocity International and MACOM Technology.

Diversification Opportunities for Videolocity International and MACOM Technology

0.0

Correlation Coefficient

Videolocity International  MACOM Technology

Pay attention - limited upside

The 3 months correlation between Videolocity and MACOM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Videolocity International and MACOM Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACOM Technology Sol and Videolocity International 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 Videolocity International are associated (or correlated) with MACOM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACOM Technology Sol has no effect on the direction of Videolocity International i.e., Videolocity International and MACOM Technology go up and down completely randomly.

Pair Corralation between Videolocity International and MACOM Technology

If you would invest  9,762  in MACOM Technology Solutions on January 31, 2024 and sell it today you would earn a total of  433.00  from holding MACOM Technology Solutions or generate 4.44% return on investment over 90 days.

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

Videolocity International  vs.  MACOM Technology Solutions

Videolocity International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Videolocity International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Videolocity International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

MACOM Technology Sol

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MACOM Technology Solutions are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, MACOM Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Videolocity International and MACOM Technology

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

The idea behind Videolocity International and MACOM Technology Solutions 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.