Correlation Between Aluminumof China and Wayside Technology

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

By analyzing existing cross correlation between Aluminum of and Wayside Technology Group, you can compare the effects of market volatilities on Aluminumof China and Wayside 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 Aluminumof China with a short position of Wayside Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Wayside Technology.

Diversification Opportunities for Aluminumof China and Wayside Technology

0.16

Correlation Coefficient

Aluminumof China  Wayside Technology

Average diversification

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

Pair Corralation between Aluminumof China and Wayside Technology

Assuming the 90 days horizon Aluminum of is expected to generate 1.36 times more return on investment than Wayside Technology. However, Aluminumof China is 1.36 times more volatile than Wayside Technology Group. It trades about 0.14 of its potential returns per unit of risk. Wayside Technology Group is currently generating about 0.17 per unit of risk. If you would invest  50.00  in Aluminum of on September 17, 2024 and sell it today you would earn a total of  5.00  from holding Aluminum of or generate 10.0% return on investment over 90 days.

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

Aluminum of  vs.  Wayside Technology Group

Aluminumof China

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aluminum of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aluminumof China reported solid returns over the last few months and may actually be approaching a breakup point.

Wayside Technology

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wayside Technology Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Wayside Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aluminumof China and Wayside Technology

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

The idea behind Aluminum of and Wayside Technology 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.