Correlation Between AST SpaceMobile and Varca Ventures

Can any of the company-specific risk be diversified away by investing in both AST SpaceMobile and Varca Ventures 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 AST SpaceMobile and Varca Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AST SpaceMobile and Varca Ventures, you can compare the effects of market volatilities on AST SpaceMobile and Varca Ventures 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 AST SpaceMobile with a short position of Varca Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of AST SpaceMobile and Varca Ventures.

Diversification Opportunities for AST SpaceMobile and Varca Ventures

-0.38

Correlation Coefficient

AST SpaceMobile  Varca Ventures

Very good diversification

The 3 months correlation between AST and Varca is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding AST SpaceMobile and Varca Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varca Ventures and AST SpaceMobile 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 AST SpaceMobile are associated (or correlated) with Varca Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varca Ventures has no effect on the direction of AST SpaceMobile i.e., AST SpaceMobile and Varca Ventures go up and down completely randomly.

Pair Corralation between AST SpaceMobile and Varca Ventures

Assuming the 90 days horizon AST SpaceMobile is expected to generate 1.24 times less return on investment than Varca Ventures. In addition to that, AST SpaceMobile is 1.45 times more volatile than Varca Ventures. It trades about 0.07 of its total potential returns per unit of risk. Varca Ventures is currently generating about 0.13 per unit of volatility. If you would invest  0.02  in Varca Ventures on February 20, 2024 and sell it today you would earn a total of  0.02  from holding Varca Ventures or generate 100.0% return on investment over 90 days.

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

AST SpaceMobile  vs.  Varca Ventures

AST SpaceMobile

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AST SpaceMobile are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, AST SpaceMobile showed solid returns over the last few months and may actually be approaching a breakup point.

Varca Ventures

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Varca Ventures are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Varca Ventures showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AST SpaceMobile and Varca Ventures

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

The idea behind AST SpaceMobile and Varca Ventures 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 Commodity Directory module to find actively traded commodities issued by global exchanges.