Correlation Between MEYER PLC and VFD GROUP

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

By analyzing existing cross correlation between MEYER PLC and VFD GROUP, you can compare the effects of market volatilities on MEYER PLC and VFD 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 MEYER PLC with a short position of VFD GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEYER PLC and VFD GROUP.

Diversification Opportunities for MEYER PLC and VFD GROUP

0.44

Correlation Coefficient

MEYER PLC  VFD GROUP

Very weak diversification

The 3 months correlation between MEYER and VFD is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding MEYER PLC and VFD GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VFD GROUP and MEYER PLC 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 MEYER PLC are associated (or correlated) with VFD GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VFD GROUP has no effect on the direction of MEYER PLC i.e., MEYER PLC and VFD GROUP go up and down completely randomly.

Pair Corralation between MEYER PLC and VFD GROUP

Assuming the 90 days trading horizon MEYER PLC is expected to generate 0.71 times more return on investment than VFD GROUP. However, MEYER PLC is 1.4 times less risky than VFD GROUP. It trades about 0.18 of its potential returns per unit of risk. VFD GROUP is currently generating about 0.12 per unit of risk. If you would invest  767.00  in MEYER PLC on December 2, 2024 and sell it today you would earn a total of  158.00  from holding MEYER PLC or generate 20.6% return on investment over 90 days.

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

MEYER PLC  vs.  VFD GROUP

MEYER PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MEYER PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, MEYER PLC showed solid returns over the last few months and may actually be approaching a breakup point.

VFD GROUP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VFD GROUP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, VFD GROUP unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MEYER PLC and VFD GROUP

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

The idea behind MEYER PLC and VFD GROUP 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 Commodity Directory module to find actively traded commodities issued by global exchanges.