Correlation Between Wetouch Technology and Innovative Payment

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

By analyzing existing cross correlation between Wetouch Technology Common and Innovative Payment Solutions, you can compare the effects of market volatilities on Wetouch Technology and Innovative Payment 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 Wetouch Technology with a short position of Innovative Payment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wetouch Technology and Innovative Payment.

Diversification Opportunities for Wetouch Technology and Innovative Payment

-0.33

Correlation Coefficient

Wetouch Technology  Innovative Payment

Very good diversification

The 3 months correlation between Wetouch and Innovative is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Wetouch Technology Common and Innovative Payment Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Payment and Wetouch Technology 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 Wetouch Technology Common are associated (or correlated) with Innovative Payment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Payment has no effect on the direction of Wetouch Technology i.e., Wetouch Technology and Innovative Payment go up and down completely randomly.

Pair Corralation between Wetouch Technology and Innovative Payment

Given the investment horizon of 90 days Wetouch Technology Common is expected to generate 0.62 times more return on investment than Innovative Payment. However, Wetouch Technology Common is 1.6 times less risky than Innovative Payment. It trades about 0.01 of its potential returns per unit of risk. Innovative Payment Solutions is currently generating about 0.0 per unit of risk. If you would invest  182.00  in Wetouch Technology Common on September 17, 2024 and sell it today you would lose (16.00) from holding Wetouch Technology Common or give up 8.79% of portfolio value over 90 days.

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

Wetouch Technology Common  vs.  Innovative Payment Solutions

Wetouch Technology Common

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Wetouch Technology Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Wetouch Technology is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Innovative Payment

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Innovative Payment Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Innovative Payment is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Wetouch Technology and Innovative Payment

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

The idea behind Wetouch Technology Common and Innovative Payment Solutions 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.