Correlation Between Wesure Global and Teuza A

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

By analyzing existing cross correlation between Wesure Global Tech and Teuza A Fairchild, you can compare the effects of market volatilities on Wesure Global and Teuza A 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 Wesure Global with a short position of Teuza A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesure Global and Teuza A.

Diversification Opportunities for Wesure Global and Teuza A

-0.17

Correlation Coefficient

Wesure Global  Teuza A

Good diversification

The 3 months correlation between Wesure and Teuza is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Wesure Global Tech and Teuza A Fairchild in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teuza A Fairchild and Wesure Global 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 Wesure Global Tech are associated (or correlated) with Teuza A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teuza A Fairchild has no effect on the direction of Wesure Global i.e., Wesure Global and Teuza A go up and down completely randomly.

Pair Corralation between Wesure Global and Teuza A

Assuming the 90 days trading horizon Wesure Global Tech is expected to generate 0.69 times more return on investment than Teuza A. However, Wesure Global Tech is 1.46 times less risky than Teuza A. It trades about 0.45 of its potential returns per unit of risk. Teuza A Fairchild is currently generating about -0.02 per unit of risk. If you would invest  30,210  in Wesure Global Tech on September 29, 2024 and sell it today you would earn a total of  24,730  from holding Wesure Global Tech or generate 81.86% return on investment over 90 days.

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

Wesure Global Tech  vs.  Teuza A Fairchild

Wesure Global Tech

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Wesure Global Tech are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wesure Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Teuza A Fairchild

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teuza A Fairchild has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Teuza A is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wesure Global and Teuza A

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

The idea behind Wesure Global Tech and Teuza A Fairchild 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 Global Correlations module to find global opportunities by holding instruments from different markets.