Correlation Between Weebit Nano and Carlton Investments

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

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

Diversification Opportunities for Weebit Nano and Carlton Investments

0.73

Correlation Coefficient

Weebit Nano  Carlton Investments

Poor diversification

The 3 months correlation between Weebit and Carlton is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Weebit Nano and Carlton Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlton Investments and Weebit Nano 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 Weebit Nano are associated (or correlated) with Carlton Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlton Investments has no effect on the direction of Weebit Nano i.e., Weebit Nano and Carlton Investments go up and down completely randomly.

Pair Corralation between Weebit Nano and Carlton Investments

Assuming the 90 days trading horizon Weebit Nano is expected to generate 6.17 times more return on investment than Carlton Investments. However, Weebit Nano is 6.17 times more volatile than Carlton Investments. It trades about 0.16 of its potential returns per unit of risk. Carlton Investments is currently generating about 0.09 per unit of risk. If you would invest  192.00  in Weebit Nano on September 13, 2024 and sell it today you would earn a total of  97.00  from holding Weebit Nano or generate 50.52% return on investment over 90 days.

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

Weebit Nano  vs.  Carlton Investments

Weebit Nano

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Weebit Nano are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Weebit Nano unveiled solid returns over the last few months and may actually be approaching a breakup point.

Carlton Investments

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carlton Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carlton Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Weebit Nano and Carlton Investments

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

The idea behind Weebit Nano and Carlton Investments 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.