Correlation Between Central Asia and Walmart

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

By analyzing existing cross correlation between Central Asia Metals and Walmart, you can compare the effects of market volatilities on Central Asia and Walmart 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 Central Asia with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and Walmart.

Diversification Opportunities for Central Asia and Walmart

-0.47

Correlation Coefficient

Central Asia  Walmart

Very good diversification

The 3 months correlation between Central and Walmart is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Central Asia 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 Central Asia Metals are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Central Asia i.e., Central Asia and Walmart go up and down completely randomly.

Pair Corralation between Central Asia and Walmart

Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the Walmart. In addition to that, Central Asia is 31.6 times more volatile than Walmart. It trades about -0.25 of its total potential returns per unit of risk. Walmart is currently generating about 0.12 per unit of volatility. If you would invest  5,939  in Walmart on September 27, 2024 and sell it today you would earn a total of  21.00  from holding Walmart or generate 0.35% return on investment over 90 days.

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

Central Asia Metals  vs.  Walmart

Central Asia Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Walmart

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Walmart is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Central Asia and Walmart

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

The idea behind Central Asia Metals and Walmart 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.