Correlation Between WildBrain and Royal Helium

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

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

Diversification Opportunities for WildBrain and Royal Helium

0.63

Correlation Coefficient

WildBrain  Royal Helium

Poor diversification

The 3 months correlation between WildBrain and Royal is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding WildBrain and Royal Helium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Helium and WildBrain 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 WildBrain are associated (or correlated) with Royal Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Helium has no effect on the direction of WildBrain i.e., WildBrain and Royal Helium go up and down completely randomly.

Pair Corralation between WildBrain and Royal Helium

Assuming the 90 days trading horizon WildBrain is expected to generate 0.43 times more return on investment than Royal Helium. However, WildBrain is 2.32 times less risky than Royal Helium. It trades about 0.04 of its potential returns per unit of risk. Royal Helium is currently generating about -0.07 per unit of risk. If you would invest  134.00  in WildBrain on September 14, 2024 and sell it today you would earn a total of  7.00  from holding WildBrain or generate 5.22% return on investment over 90 days.

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

WildBrain  vs.  Royal Helium

WildBrain

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WildBrain are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, WildBrain may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Royal Helium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Helium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with WildBrain and Royal Helium

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

The idea behind WildBrain and Royal Helium 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..