Correlation Between WiMi Hologram and United Fire

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

By analyzing existing cross correlation between WiMi Hologram Cloud and United Fire Group, you can compare the effects of market volatilities on WiMi Hologram and United Fire 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 WiMi Hologram with a short position of United Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiMi Hologram and United Fire.

Diversification Opportunities for WiMi Hologram and United Fire

-0.35

Correlation Coefficient

WiMi Hologram  United Fire

Very good diversification

The 3 months correlation between WiMi and United is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding WiMi Hologram Cloud and United Fire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Fire Group and WiMi Hologram 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 WiMi Hologram Cloud are associated (or correlated) with United Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Fire Group has no effect on the direction of WiMi Hologram i.e., WiMi Hologram and United Fire go up and down completely randomly.

Pair Corralation between WiMi Hologram and United Fire

Given the investment horizon of 90 days WiMi Hologram is expected to generate 2.46 times less return on investment than United Fire. In addition to that, WiMi Hologram is 1.27 times more volatile than United Fire Group. It trades about 0.06 of its total potential returns per unit of risk. United Fire Group is currently generating about 0.19 per unit of volatility. If you would invest  2,026  in United Fire Group on September 3, 2024 and sell it today you would earn a total of  1,034  from holding United Fire Group or generate 51.04% return on investment over 90 days.

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

WiMi Hologram Cloud  vs.  United Fire Group

WiMi Hologram Cloud

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WiMi Hologram Cloud are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak primary indicators, WiMi Hologram demonstrated solid returns over the last few months and may actually be approaching a breakup point.

United Fire Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Fire Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, United Fire unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WiMi Hologram and United Fire

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

The idea behind WiMi Hologram Cloud and United Fire Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.