Correlation Between Global Develpmts and Wialan Technologies

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

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

Diversification Opportunities for Global Develpmts and Wialan Technologies

0.01

Correlation Coefficient

Global Develpmts  Wialan Technologies

Significant diversification

The 3 months correlation between Global and Wialan is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Global Develpmts and Wialan Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wialan Technologies and Global Develpmts 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 Global Develpmts are associated (or correlated) with Wialan Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wialan Technologies has no effect on the direction of Global Develpmts i.e., Global Develpmts and Wialan Technologies go up and down completely randomly.

Pair Corralation between Global Develpmts and Wialan Technologies

Given the investment horizon of 90 days Global Develpmts is expected to under-perform the Wialan Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Global Develpmts is 1.08 times less risky than Wialan Technologies. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Wialan Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.11  in Wialan Technologies on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Wialan Technologies or generate 0.0% return on investment over 90 days.

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

Global Develpmts  vs.  Wialan Technologies

Global Develpmts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Develpmts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Wialan Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wialan Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Wialan Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Develpmts and Wialan Technologies

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

The idea behind Global Develpmts and Wialan Technologies 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.