Correlation Between WISE ITech and SOOSAN INT

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

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

Diversification Opportunities for WISE ITech and SOOSAN INT

0.7

Correlation Coefficient

WISE ITech  SOOSAN INT

Poor diversification

The 3 months correlation between WISE and SOOSAN is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding WISE iTech Co and SOOSAN INT Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOOSAN INT and WISE ITech 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 WISE iTech Co are associated (or correlated) with SOOSAN INT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOOSAN INT has no effect on the direction of WISE ITech i.e., WISE ITech and SOOSAN INT go up and down completely randomly.

Pair Corralation between WISE ITech and SOOSAN INT

Assuming the 90 days trading horizon WISE ITech is expected to generate 1.94 times less return on investment than SOOSAN INT. But when comparing it to its historical volatility, WISE iTech Co is 1.13 times less risky than SOOSAN INT. It trades about 0.07 of its potential returns per unit of risk. SOOSAN INT Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,026,000  in SOOSAN INT Co on September 26, 2024 and sell it today you would earn a total of  468,000  from holding SOOSAN INT Co or generate 45.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

WISE iTech Co  vs.  SOOSAN INT Co

WISE iTech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WISE iTech Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, WISE ITech sustained solid returns over the last few months and may actually be approaching a breakup point.

SOOSAN INT

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOOSAN INT Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SOOSAN INT sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WISE ITech and SOOSAN INT

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

The idea behind WISE iTech Co and SOOSAN INT Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.