Correlation Between ThinTech Materials and Waffer Technology

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

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

Diversification Opportunities for ThinTech Materials and Waffer Technology

0.37

Correlation Coefficient

ThinTech Materials  Waffer Technology

Weak diversification

The 3 months correlation between ThinTech and Waffer is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding ThinTech Materials Technology and Waffer Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waffer Technology Corp and ThinTech Materials 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 ThinTech Materials Technology are associated (or correlated) with Waffer Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waffer Technology Corp has no effect on the direction of ThinTech Materials i.e., ThinTech Materials and Waffer Technology go up and down completely randomly.

Pair Corralation between ThinTech Materials and Waffer Technology

Assuming the 90 days trading horizon ThinTech Materials is expected to generate 16.16 times less return on investment than Waffer Technology. But when comparing it to its historical volatility, ThinTech Materials Technology is 20.07 times less risky than Waffer Technology. It trades about 0.09 of its potential returns per unit of risk. Waffer Technology Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,710  in Waffer Technology Corp on September 28, 2024 and sell it today you would lose (1,810) from holding Waffer Technology Corp or give up 20.78% of portfolio value over 90 days.

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

ThinTech Materials Technology  vs.  Waffer Technology Corp

ThinTech Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ThinTech Materials Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Waffer Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waffer Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Waffer Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ThinTech Materials and Waffer Technology

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

The idea behind ThinTech Materials Technology and Waffer Technology Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.