Correlation Between Velan and ADF
Can any of the company-specific risk be diversified away by investing in both Velan and ADF 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 Velan and ADF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Velan Inc and ADF Group, you can compare the effects of market volatilities on Velan and ADF 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 Velan with a short position of ADF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Velan and ADF.
Diversification Opportunities for Velan and ADF
Pay attention - limited upside
The 3 months correlation between Velan and ADF is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Velan Inc and ADF Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADF Group and Velan 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 Velan Inc are associated (or correlated) with ADF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADF Group has no effect on the direction of Velan i.e., Velan and ADF go up and down completely randomly.
Pair Corralation between Velan and ADF
Assuming the 90 days trading horizon Velan Inc is expected to generate 0.81 times more return on investment than ADF. However, Velan Inc is 1.23 times less risky than ADF. It trades about -0.03 of its potential returns per unit of risk. ADF Group is currently generating about -0.21 per unit of risk. If you would invest 1,140 in Velan Inc on August 30, 2024 and sell it today you would lose (30.00) from holding Velan Inc or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Velan Inc vs. ADF Group
Performance |
| Timeline |
| Velan Inc |
| ADF Group |
Velan and ADF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Velan and ADF
The main advantage of trading using opposite Velan and ADF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Velan position performs unexpectedly, ADF 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 ADF will offset losses from the drop in ADF's long position.| Velan vs. Apple Inc CDR | Velan vs. Berkshire Hathaway CDR | Velan vs. Microsoft Corp CDR | Velan vs. Alphabet Inc CDR |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |