Correlation Between Weir Group and Next Hydrogen
Can any of the company-specific risk be diversified away by investing in both Weir Group and Next Hydrogen 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 Weir Group and Next Hydrogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weir Group PLC and Next Hydrogen Solutions, you can compare the effects of market volatilities on Weir Group and Next Hydrogen 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 Weir Group with a short position of Next Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weir Group and Next Hydrogen.
Diversification Opportunities for Weir Group and Next Hydrogen
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Weir and Next is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Weir Group PLC and Next Hydrogen Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Hydrogen Solutions and Weir Group 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 Weir Group PLC are associated (or correlated) with Next Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Hydrogen Solutions has no effect on the direction of Weir Group i.e., Weir Group and Next Hydrogen go up and down completely randomly.
Pair Corralation between Weir Group and Next Hydrogen
Assuming the 90 days horizon Weir Group is expected to generate 7.7 times less return on investment than Next Hydrogen. But when comparing it to its historical volatility, Weir Group PLC is 8.68 times less risky than Next Hydrogen. It trades about 0.05 of its potential returns per unit of risk. Next Hydrogen Solutions is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 93.00 in Next Hydrogen Solutions on September 3, 2024 and sell it today you would lose (63.00) from holding Next Hydrogen Solutions or give up 67.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.78% |
| Values | Daily Returns |
Weir Group PLC vs. Next Hydrogen Solutions
Performance |
| Timeline |
| Weir Group PLC |
| Next Hydrogen Solutions |
Weir Group and Next Hydrogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weir Group and Next Hydrogen
The main advantage of trading using opposite Weir Group and Next Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weir Group position performs unexpectedly, Next Hydrogen 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 Next Hydrogen will offset losses from the drop in Next Hydrogen's long position.| Weir Group vs. Dear Cashmere Holding | Weir Group vs. Goff Corp | Weir Group vs. Wialan Technologies | Weir Group vs. Cgrowth Capital |
| Next Hydrogen vs. Weir Group PLC | Next Hydrogen vs. Greenshift Corp | Next Hydrogen vs. Quality Industrial Corp | Next Hydrogen vs. ITM Power 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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