Correlation Between VELA TECHNOLPLC and Northern Data

Can any of the company-specific risk be diversified away by investing in both VELA TECHNOLPLC and Northern Data 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 Northern Data 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 Northern Data AG, you can compare the effects of market volatilities on VELA TECHNOLPLC and Northern Data 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 Northern Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of VELA TECHNOLPLC and Northern Data.

Diversification Opportunities for VELA TECHNOLPLC and Northern Data

0.0

Correlation Coefficient

VELA TECHNOLPLC  Northern Data

Pay attention - limited upside

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

Pair Corralation between VELA TECHNOLPLC and Northern Data

If you would invest  4,435  in Northern Data AG on October 26, 2024 and sell it today you would earn a total of  275.00  from holding Northern Data AG or generate 6.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

VELA TECHNOLPLC LS 0001  vs.  Northern Data AG

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.

Northern Data AG

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Data AG are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Northern Data unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VELA TECHNOLPLC and Northern Data

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

The idea behind VELA TECHNOLPLC LS 0001 and Northern Data AG 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.