Correlation Between World Technology and Mawson Infrastructure

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

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

Diversification Opportunities for World Technology and Mawson Infrastructure

-0.37

Correlation Coefficient

World Technology  Mawson Infrastructure

Very good diversification

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

Pair Corralation between World Technology and Mawson Infrastructure

Given the investment horizon of 90 days World Technology is expected to generate 2.39 times less return on investment than Mawson Infrastructure. But when comparing it to its historical volatility, World Technology Corp is 1.33 times less risky than Mawson Infrastructure. It trades about 0.05 of its potential returns per unit of risk. Mawson Infrastructure Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  117.00  in Mawson Infrastructure Group on September 17, 2024 and sell it today you would earn a total of  7.00  from holding Mawson Infrastructure Group or generate 5.98% return on investment over 90 days.

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

World Technology Corp  vs.  Mawson Infrastructure Group

World Technology Corp

Risk-Adjusted Performance

3 of 100

Insignificant

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

Mawson Infrastructure

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mawson Infrastructure Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Mawson Infrastructure demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with World Technology and Mawson Infrastructure

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

The idea behind World Technology Corp and Mawson Infrastructure 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..