Correlation Between WM Technology and Antioquia Gold

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

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

Diversification Opportunities for WM Technology and Antioquia Gold

0.41

Correlation Coefficient

WM Technology  Antioquia Gold

Very weak diversification

The 3 months correlation between MAPSW and Antioquia is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding WM Technology and Antioquia Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antioquia Gold and WM 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 WM Technology are associated (or correlated) with Antioquia Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antioquia Gold has no effect on the direction of WM Technology i.e., WM Technology and Antioquia Gold go up and down completely randomly.

Pair Corralation between WM Technology and Antioquia Gold

Assuming the 90 days horizon WM Technology is expected to generate 1.25 times less return on investment than Antioquia Gold. In addition to that, WM Technology is 1.11 times more volatile than Antioquia Gold. It trades about 0.08 of its total potential returns per unit of risk. Antioquia Gold is currently generating about 0.11 per unit of volatility. If you would invest  1.10  in Antioquia Gold on September 4, 2024 and sell it today you would earn a total of  0.90  from holding Antioquia Gold or generate 81.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

WM Technology  vs.  Antioquia Gold

WM Technology

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WM Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, WM Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Antioquia Gold

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Antioquia Gold are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Antioquia Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WM Technology and Antioquia Gold

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

The idea behind WM Technology and Antioquia Gold 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.