Correlation Between Leading Edge and Vitec Software

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

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

Diversification Opportunities for Leading Edge and Vitec Software

0.16

Correlation Coefficient

Leading Edge  Vitec Software

Average diversification

The 3 months correlation between Leading and Vitec is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and Vitec Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitec Software Group and Leading Edge 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 Leading Edge Materials are associated (or correlated) with Vitec Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitec Software Group has no effect on the direction of Leading Edge i.e., Leading Edge and Vitec Software go up and down completely randomly.

Pair Corralation between Leading Edge and Vitec Software

Assuming the 90 days trading horizon Leading Edge Materials is expected to under-perform the Vitec Software. In addition to that, Leading Edge is 1.6 times more volatile than Vitec Software Group. It trades about -0.1 of its total potential returns per unit of risk. Vitec Software Group is currently generating about -0.1 per unit of volatility. If you would invest  45,689  in Vitec Software Group on May 4, 2025 and sell it today you would lose (8,209) from holding Vitec Software Group or give up 17.97% of portfolio value over 90 days.

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

Leading Edge Materials  vs.  Vitec Software Group

Leading Edge Materials

Risk-Adjusted Performance

Very Weak

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

Vitec Software Group

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Leading Edge and Vitec Software

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

The idea behind Leading Edge Materials and Vitec 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.