Correlation Between Velo3D and AstroNova

Can any of the company-specific risk be diversified away by investing in both Velo3D and AstroNova 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 Velo3D and AstroNova into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Velo3D Inc and AstroNova, you can compare the effects of market volatilities on Velo3D and AstroNova 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 Velo3D with a short position of AstroNova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Velo3D and AstroNova.

Diversification Opportunities for Velo3D and AstroNova

-0.05

Correlation Coefficient

Velo3D  AstroNova

Good diversification

The 3 months correlation between Velo3D and AstroNova is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Velo3D Inc and AstroNova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstroNova and Velo3D 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 Velo3D Inc are associated (or correlated) with AstroNova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstroNova has no effect on the direction of Velo3D i.e., Velo3D and AstroNova go up and down completely randomly.

Pair Corralation between Velo3D and AstroNova

Considering the 90-day investment horizon Velo3D Inc is expected to generate 11.61 times more return on investment than AstroNova. However, Velo3D is 11.61 times more volatile than AstroNova. It trades about 0.08 of its potential returns per unit of risk. AstroNova is currently generating about 0.04 per unit of risk. If you would invest  129.00  in Velo3D Inc on September 3, 2024 and sell it today you would lose (32.00) from holding Velo3D Inc or give up 24.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	21.88%
Values	Daily Returns

Velo3D Inc  vs.  AstroNova

Velo3D Inc

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Velo3D Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain essential indicators, Velo3D exhibited solid returns over the last few months and may actually be approaching a breakup point.

AstroNova

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AstroNova are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AstroNova is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Velo3D and AstroNova

The main advantage of trading using opposite Velo3D and AstroNova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Velo3D position performs unexpectedly, AstroNova 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 AstroNova will offset losses from the drop in AstroNova's long position.

The idea behind Velo3D Inc and AstroNova 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.