Correlation Between Wave Entertainment and Green Resources

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

By analyzing existing cross correlation between Wave Entertainment Public and Green Resources Public, you can compare the effects of market volatilities on Wave Entertainment and Green Resources 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 Wave Entertainment with a short position of Green Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wave Entertainment and Green Resources.

Diversification Opportunities for Wave Entertainment and Green Resources

-0.14

Correlation Coefficient

Wave Entertainment  Green Resources

Good diversification

The 3 months correlation between Wave and Green is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Wave Entertainment Public and Green Resources Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Resources Public and Wave Entertainment 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 Wave Entertainment Public are associated (or correlated) with Green Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Resources Public has no effect on the direction of Wave Entertainment i.e., Wave Entertainment and Green Resources go up and down completely randomly.

Pair Corralation between Wave Entertainment and Green Resources

Assuming the 90 days trading horizon Wave Entertainment Public is expected to under-perform the Green Resources. In addition to that, Wave Entertainment is 2.24 times more volatile than Green Resources Public. It trades about -0.11 of its total potential returns per unit of risk. Green Resources Public is currently generating about 0.04 per unit of volatility. If you would invest  103.00  in Green Resources Public on September 15, 2024 and sell it today you would earn a total of  4.00  from holding Green Resources Public or generate 3.88% return on investment over 90 days.

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

Wave Entertainment Public  vs.  Green Resources Public

Wave Entertainment Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wave Entertainment Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Green Resources Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Green Resources Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Green Resources is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wave Entertainment and Green Resources

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

The idea behind Wave Entertainment Public and Green Resources Public 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.