Correlation Between WELL Health and Winpak

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

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

Diversification Opportunities for WELL Health and Winpak

0.41

Correlation Coefficient

WELL Health  Winpak

Very weak diversification

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

Pair Corralation between WELL Health and Winpak

Assuming the 90 days trading horizon WELL Health Technologies is expected to generate 2.03 times more return on investment than Winpak. However, WELL Health is 2.03 times more volatile than Winpak. It trades about 0.29 of its potential returns per unit of risk. Winpak is currently generating about 0.06 per unit of risk. If you would invest  440.00  in WELL Health Technologies on September 26, 2024 and sell it today you would earn a total of  265.00  from holding WELL Health Technologies or generate 60.23% return on investment over 90 days.

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

WELL Health Technologies  vs.  Winpak

WELL Health Technologies

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WELL Health Technologies are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, WELL Health displayed solid returns over the last few months and may actually be approaching a breakup point.

Winpak

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Winpak are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Winpak is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with WELL Health and Winpak

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

The idea behind WELL Health Technologies and Winpak 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.