Correlation Between WinMate Communication and Arbor Technology

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

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

Diversification Opportunities for WinMate Communication and Arbor Technology

0.63

Correlation Coefficient

WinMate Communication  Arbor Technology

Poor diversification

The 3 months correlation between WinMate and Arbor is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding WinMate Communication INC and Arbor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Technology and WinMate Communication 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 WinMate Communication INC are associated (or correlated) with Arbor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Technology has no effect on the direction of WinMate Communication i.e., WinMate Communication and Arbor Technology go up and down completely randomly.

Pair Corralation between WinMate Communication and Arbor Technology

Assuming the 90 days trading horizon WinMate Communication INC is expected to generate 0.66 times more return on investment than Arbor Technology. However, WinMate Communication INC is 1.51 times less risky than Arbor Technology. It trades about 0.1 of its potential returns per unit of risk. Arbor Technology is currently generating about 0.06 per unit of risk. If you would invest  13,800  in WinMate Communication INC on August 31, 2024 and sell it today you would earn a total of  1,350  from holding WinMate Communication INC or generate 9.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

WinMate Communication INC  vs.  Arbor Technology

WinMate Communication INC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WinMate Communication INC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, WinMate Communication may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Arbor Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arbor Technology may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with WinMate Communication and Arbor Technology

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

The idea behind WinMate Communication INC and Arbor Technology 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.