Correlation Between VeChain and Near

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

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

Diversification Opportunities for VeChain and Near

0.91

Correlation Coefficient

VeChain  Near

Almost no diversification

The 3 months correlation between VeChain and Near is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding VeChain and Near in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Near and VeChain 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 VeChain are associated (or correlated) with Near. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Near has no effect on the direction of VeChain i.e., VeChain and Near go up and down completely randomly.

Pair Corralation between VeChain and Near

Assuming the 90 days trading horizon VeChain is expected to generate 1.09 times more return on investment than Near. However, VeChain is 1.09 times more volatile than Near. It trades about 0.24 of its potential returns per unit of risk. Near is currently generating about 0.2 per unit of risk. If you would invest  2.14  in VeChain on September 3, 2024 and sell it today you would earn a total of  2.45  from holding VeChain or generate 114.49% return on investment over 90 days.

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

VeChain  vs.  Near

VeChain

Risk-Adjusted Performance

18 of 100

Solid

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

Near

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Near are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Near exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VeChain and Near

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

The idea behind VeChain and Near 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.