Correlation Between Weir Group and Aptitude Software

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

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

Diversification Opportunities for Weir Group and Aptitude Software

-0.61

Correlation Coefficient

Weir Group  Aptitude Software

Excellent diversification

The 3 months correlation between Weir and Aptitude is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Weir Group PLC and Aptitude Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptitude Software and Weir Group 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 Weir Group PLC are associated (or correlated) with Aptitude Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptitude Software has no effect on the direction of Weir Group i.e., Weir Group and Aptitude Software go up and down completely randomly.

Pair Corralation between Weir Group and Aptitude Software

Assuming the 90 days trading horizon Weir Group PLC is expected to generate 0.71 times more return on investment than Aptitude Software. However, Weir Group PLC is 1.41 times less risky than Aptitude Software. It trades about 0.09 of its potential returns per unit of risk. Aptitude Software Group is currently generating about -0.13 per unit of risk. If you would invest  218,200  in Weir Group PLC on December 22, 2024 and sell it today you would earn a total of  18,000  from holding Weir Group PLC or generate 8.25% return on investment over 90 days.

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

Weir Group PLC  vs.  Aptitude Software Group

Weir Group PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Weir Group PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Weir Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Aptitude Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aptitude Software Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Weir Group and Aptitude Software

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

The idea behind Weir Group PLC and Aptitude Software 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.