Correlation Between Vecima Networks and Hammond Power

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

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

Diversification Opportunities for Vecima Networks and Hammond Power

0.17

Correlation Coefficient

Vecima Networks  Hammond Power

Average diversification

The 3 months correlation between Vecima and Hammond is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Vecima Networks and Hammond Power Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammond Power Solutions and Vecima Networks 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 Vecima Networks are associated (or correlated) with Hammond Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammond Power Solutions has no effect on the direction of Vecima Networks i.e., Vecima Networks and Hammond Power go up and down completely randomly.

Pair Corralation between Vecima Networks and Hammond Power

Assuming the 90 days trading horizon Vecima Networks is expected to generate 1.52 times less return on investment than Hammond Power. In addition to that, Vecima Networks is 1.17 times more volatile than Hammond Power Solutions. It trades about 0.15 of its total potential returns per unit of risk. Hammond Power Solutions is currently generating about 0.26 per unit of volatility. If you would invest  9,193  in Hammond Power Solutions on April 24, 2025 and sell it today you would earn a total of  4,008  from holding Hammond Power Solutions or generate 43.6% return on investment over 90 days.

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

Vecima Networks  vs.  Hammond Power Solutions

Vecima Networks

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vecima Networks are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Vecima Networks displayed solid returns over the last few months and may actually be approaching a breakup point.

Hammond Power Solutions

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hammond Power Solutions are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hammond Power unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vecima Networks and Hammond Power

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

The idea behind Vecima Networks and Hammond Power Solutions 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.