Correlation Between Raytech Holding and Winmark

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

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

Diversification Opportunities for Raytech Holding and Winmark

-0.48

Correlation Coefficient

Raytech Holding  Winmark

Very good diversification

The 3 months correlation between Raytech and Winmark is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Raytech Holding Limited and Winmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winmark and Raytech Holding 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 Raytech Holding Limited are associated (or correlated) with Winmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winmark has no effect on the direction of Raytech Holding i.e., Raytech Holding and Winmark go up and down completely randomly.

Pair Corralation between Raytech Holding and Winmark

Considering the 90-day investment horizon Raytech Holding Limited is expected to under-perform the Winmark. In addition to that, Raytech Holding is 2.48 times more volatile than Winmark. It trades about -0.03 of its total potential returns per unit of risk. Winmark is currently generating about 0.12 per unit of volatility. If you would invest  35,448  in Winmark on September 15, 2024 and sell it today you would earn a total of  5,315  from holding Winmark or generate 14.99% return on investment over 90 days.

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

Raytech Holding Limited  vs.  Winmark

Raytech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raytech Holding Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Winmark

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Winmark are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Winmark sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Raytech Holding and Winmark

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

The idea behind Raytech Holding Limited and Winmark 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.