Correlation Between Willy Food and Trucknet Enterprise

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

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

Diversification Opportunities for Willy Food and Trucknet Enterprise

0.77

Correlation Coefficient

Willy Food  Trucknet Enterprise

Poor diversification

The 3 months correlation between Willy and Trucknet is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Willy Food and Trucknet Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trucknet Enterprise and Willy Food 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 Willy Food are associated (or correlated) with Trucknet Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trucknet Enterprise has no effect on the direction of Willy Food i.e., Willy Food and Trucknet Enterprise go up and down completely randomly.

Pair Corralation between Willy Food and Trucknet Enterprise

Assuming the 90 days trading horizon Willy Food is expected to generate 0.66 times more return on investment than Trucknet Enterprise. However, Willy Food is 1.52 times less risky than Trucknet Enterprise. It trades about 0.27 of its potential returns per unit of risk. Trucknet Enterprise is currently generating about 0.14 per unit of risk. If you would invest  207,800  in Willy Food on September 29, 2024 and sell it today you would earn a total of  81,000  from holding Willy Food or generate 38.98% return on investment over 90 days.

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

Willy Food  vs.  Trucknet Enterprise

Willy Food

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Willy Food are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Willy Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Trucknet Enterprise

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trucknet Enterprise are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Trucknet Enterprise sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Willy Food and Trucknet Enterprise

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

The idea behind Willy Food and Trucknet Enterprise 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.