Correlation Between VF Corp and The9

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Can any of the company-specific risk be diversified away by investing in both VF Corp and The9 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 VF Corp and The9 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VF Corp and The9 Ltd ADR, you can compare the effects of market volatilities on VF Corp and The9 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 VF Corp with a short position of The9. Check out your portfolio center. Please also check ongoing floating volatility patterns of VF Corp and The9.

Diversification Opportunities for VF Corp and The9

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between VF Corp and The9 is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding VF Corp and The9 Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The9 Ltd ADR and VF Corp 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 VF Corp are associated (or correlated) with The9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The9 Ltd ADR has no effect on the direction of VF Corp i.e., VF Corp and The9 go up and down completely randomly.

Pair Corralation between VF Corp and The9

Considering the 90-day investment horizon VF Corp is expected to under-perform the The9. But the stock apears to be less risky and, when comparing its historical volatility, VF Corp is 5.05 times less risky than The9. The stock trades about -0.07 of its potential returns per unit of risk. The The9 Ltd ADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  330.00  in The9 Ltd ADR on July 1, 2022 and sell it today you would lose (238.00)  from holding The9 Ltd ADR or give up 72.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

VF Corp  vs.  The9 Ltd ADR

 Performance (%) 
       Timeline  
VF Corp 
VF Corp Performance
0 of 100
Over the last 90 days VF Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

VF Corp Price Channel

The9 Ltd ADR 
The9 Performance
0 of 100
Over the last 90 days The9 Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

The9 Price Channel

VF Corp and The9 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VF Corp and The9

The main advantage of trading using opposite VF Corp and The9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VF Corp position performs unexpectedly, The9 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 The9 will offset losses from the drop in The9's long position.
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The idea behind VF Corp and The9 Ltd ADR 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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Check out your portfolio center. 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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