Correlation Between VELA TECHNOLPLC and KOMATSU

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

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

Diversification Opportunities for VELA TECHNOLPLC and KOMATSU

0.0

Correlation Coefficient

VELA TECHNOLPLC  KOMATSU

Pay attention - limited upside

The 3 months correlation between VELA and KOMATSU is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VELA TECHNOLPLC LS 0001 and KOMATSU LTD SPONS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOMATSU LTD SPONS and VELA TECHNOLPLC 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 VELA TECHNOLPLC LS 0001 are associated (or correlated) with KOMATSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOMATSU LTD SPONS has no effect on the direction of VELA TECHNOLPLC i.e., VELA TECHNOLPLC and KOMATSU go up and down completely randomly.

Pair Corralation between VELA TECHNOLPLC and KOMATSU

If you would invest  2,560  in KOMATSU LTD SPONS on October 8, 2024 and sell it today you would earn a total of  80.00  from holding KOMATSU LTD SPONS or generate 3.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

VELA TECHNOLPLC LS 0001  vs.  KOMATSU LTD SPONS

VELA TECHNOLPLC LS

Risk-Adjusted Performance

0 of 100

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

KOMATSU LTD SPONS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KOMATSU LTD SPONS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, KOMATSU is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with VELA TECHNOLPLC and KOMATSU

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

The idea behind VELA TECHNOLPLC LS 0001 and KOMATSU LTD SPONS 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.