Correlation Between London Security and Calculus VCT
Can any of the company-specific risk be diversified away by investing in both London Security and Calculus VCT 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 London Security and Calculus VCT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Calculus VCT plc, you can compare the effects of market volatilities on London Security and Calculus VCT 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 London Security with a short position of Calculus VCT. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Calculus VCT.
Diversification Opportunities for London Security and Calculus VCT
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between London and Calculus is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and Calculus VCT plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calculus VCT plc and London Security 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 London Security Plc are associated (or correlated) with Calculus VCT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calculus VCT plc has no effect on the direction of London Security i.e., London Security and Calculus VCT go up and down completely randomly.
Pair Corralation between London Security and Calculus VCT
Assuming the 90 days trading horizon London Security Plc is expected to generate 0.93 times more return on investment than Calculus VCT. However, London Security Plc is 1.07 times less risky than Calculus VCT. It trades about 0.04 of its potential returns per unit of risk. Calculus VCT plc is currently generating about 0.02 per unit of risk. If you would invest 263,649 in London Security Plc on September 23, 2024 and sell it today you would earn a total of 76,351 from holding London Security Plc or generate 28.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
London Security Plc vs. Calculus VCT plc
Performance |
| Timeline |
| London Security Plc |
| Calculus VCT plc |
London Security and Calculus VCT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and Calculus VCT
The main advantage of trading using opposite London Security and Calculus VCT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security position performs unexpectedly, Calculus VCT 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 Calculus VCT will offset losses from the drop in Calculus VCT's long position.| London Security vs. Samsung Electronics Co | London Security vs. Samsung Electronics Co | London Security vs. Hyundai Motor | London Security vs. Toyota Motor Corp |
| Calculus VCT vs. Uniper SE | Calculus VCT vs. Mulberry Group PLC | Calculus VCT vs. London Security Plc | Calculus VCT vs. Triad Group PLC |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |