Correlation Between V Mart and CIE Automotive

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

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

Diversification Opportunities for V Mart and CIE Automotive

0.47

Correlation Coefficient

V Mart  CIE Automotive

Very weak diversification

The 3 months correlation between VMART and CIE is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding V Mart Retail Limited and CIE Automotive India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIE Automotive India and V Mart 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 V Mart Retail Limited are associated (or correlated) with CIE Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIE Automotive India has no effect on the direction of V Mart i.e., V Mart and CIE Automotive go up and down completely randomly.

Pair Corralation between V Mart and CIE Automotive

Assuming the 90 days trading horizon V Mart Retail Limited is expected to under-perform the CIE Automotive. In addition to that, V Mart is 1.3 times more volatile than CIE Automotive India. It trades about -0.03 of its total potential returns per unit of risk. CIE Automotive India is currently generating about 0.04 per unit of volatility. If you would invest  41,620  in CIE Automotive India on April 23, 2025 and sell it today you would earn a total of  1,260  from holding CIE Automotive India or generate 3.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

V Mart Retail Limited  vs.  CIE Automotive India

V Mart Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days V Mart Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, V Mart is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

CIE Automotive India

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CIE Automotive India are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, CIE Automotive is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with V Mart and CIE Automotive

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

The idea behind V Mart Retail Limited and CIE Automotive India 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.