Correlation Between VELA TECHNOLPLC and Hanison Construction
Can any of the company-specific risk be diversified away by investing in both VELA TECHNOLPLC and Hanison Construction 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 VELA TECHNOLPLC and Hanison Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VELA TECHNOLPLC LS 0001 and Hanison Construction Holdings, you can compare the effects of market volatilities on VELA TECHNOLPLC and Hanison Construction 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 VELA TECHNOLPLC with a short position of Hanison Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of VELA TECHNOLPLC and Hanison Construction.
Diversification Opportunities for VELA TECHNOLPLC and Hanison Construction
-1.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between VELA and Hanison is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding VELA TECHNOLPLC LS 0001 and Hanison Construction Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanison Construction and VELA TECHNOLPLC 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 VELA TECHNOLPLC LS 0001 are associated (or correlated) with Hanison Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanison Construction has no effect on the direction of VELA TECHNOLPLC i.e., VELA TECHNOLPLC and Hanison Construction go up and down completely randomly.
Pair Corralation between VELA TECHNOLPLC and Hanison Construction
Assuming the 90 days trading horizon VELA TECHNOLPLC LS 0001 is expected to generate 7.67 times more return on investment than Hanison Construction. However, VELA TECHNOLPLC is 7.67 times more volatile than Hanison Construction Holdings. It trades about 0.04 of its potential returns per unit of risk. Hanison Construction Holdings is currently generating about 0.05 per unit of risk. If you would invest 0.03 in VELA TECHNOLPLC LS 0001 on October 16, 2024 and sell it today you would earn a total of 0.02 from holding VELA TECHNOLPLC LS 0001 or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
VELA TECHNOLPLC LS 0001 vs. Hanison Construction Holdings
Performance |
| Timeline |
| VELA TECHNOLPLC LS |
| Hanison Construction |
VELA TECHNOLPLC and Hanison Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VELA TECHNOLPLC and Hanison Construction
The main advantage of trading using opposite VELA TECHNOLPLC and Hanison Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VELA TECHNOLPLC position performs unexpectedly, Hanison Construction 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 Hanison Construction will offset losses from the drop in Hanison Construction's long position.| VELA TECHNOLPLC vs. SLR Investment Corp | VELA TECHNOLPLC vs. Keck Seng Investments | VELA TECHNOLPLC vs. Media and Games | VELA TECHNOLPLC vs. PLAYMATES TOYS |
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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 the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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