Correlation Between Velan and Weir Group
Can any of the company-specific risk be diversified away by investing in both Velan and Weir Group 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 Weir Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Velan Inc and Weir Group PLC, you can compare the effects of market volatilities on Velan and Weir Group 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 Weir Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Velan and Weir Group.
Diversification Opportunities for Velan and Weir Group
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Velan and Weir is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Velan Inc and Weir Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weir Group PLC 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 Weir Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weir Group PLC has no effect on the direction of Velan i.e., Velan and Weir Group go up and down completely randomly.
Pair Corralation between Velan and Weir Group
Assuming the 90 days horizon Velan Inc is expected to generate 2.51 times more return on investment than Weir Group. However, Velan is 2.51 times more volatile than Weir Group PLC. It trades about 0.03 of its potential returns per unit of risk. Weir Group PLC is currently generating about 0.06 per unit of risk. If you would invest 590.00 in Velan Inc on September 13, 2024 and sell it today you would earn a total of 154.00 from holding Velan Inc or generate 26.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.58% |
| Values | Daily Returns |
Velan Inc vs. Weir Group PLC
Performance |
| Timeline |
| Velan Inc |
| Weir Group PLC |
Velan and Weir Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Velan and Weir Group
The main advantage of trading using opposite Velan and Weir Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Velan position performs unexpectedly, Weir Group 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 Weir Group will offset losses from the drop in Weir Group's long position.The idea behind Velan Inc and Weir Group PLC 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.| Weir Group vs. Greenshift Corp | Weir Group vs. Next Hydrogen Solutions | Weir Group vs. Quality Industrial Corp | Weir Group vs. Titan Logix Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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