Correlation Between GLG LIFE and VELA TECHNOLPLC

Can any of the company-specific risk be diversified away by investing in both GLG LIFE and VELA TECHNOLPLC 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 GLG LIFE and VELA TECHNOLPLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GLG LIFE TECH and VELA TECHNOLPLC LS 0001, you can compare the effects of market volatilities on GLG LIFE and VELA TECHNOLPLC 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 GLG LIFE with a short position of VELA TECHNOLPLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLG LIFE and VELA TECHNOLPLC.

Diversification Opportunities for GLG LIFE and VELA TECHNOLPLC

1.0

Correlation Coefficient

GLG LIFE  VELA TECHNOLPLC

No risk reduction

The 3 months correlation between GLG and VELA is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and VELA TECHNOLPLC LS 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VELA TECHNOLPLC LS and GLG LIFE 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 GLG LIFE TECH are associated (or correlated) with VELA TECHNOLPLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VELA TECHNOLPLC LS has no effect on the direction of GLG LIFE i.e., GLG LIFE and VELA TECHNOLPLC go up and down completely randomly.

Pair Corralation between GLG LIFE and VELA TECHNOLPLC

If you would invest  0.05  in VELA TECHNOLPLC LS 0001 on December 21, 2024 and sell it today you would earn a total of  0.00  from holding VELA TECHNOLPLC LS 0001 or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

GLG LIFE TECH  vs.  VELA TECHNOLPLC LS 0001

GLG LIFE TECH

Risk-Adjusted Performance

Very Weak

Over the last 90 days GLG LIFE TECH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GLG LIFE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

VELA TECHNOLPLC LS

Risk-Adjusted Performance

Very Weak

Over the last 90 days VELA TECHNOLPLC LS 0001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, VELA TECHNOLPLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GLG LIFE and VELA TECHNOLPLC

The main advantage of trading using opposite GLG LIFE and VELA TECHNOLPLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLG LIFE position performs unexpectedly, VELA TECHNOLPLC 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 VELA TECHNOLPLC will offset losses from the drop in VELA TECHNOLPLC's long position.

The idea behind GLG LIFE TECH and VELA TECHNOLPLC LS 0001 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..