Correlation Between Wesana Health and Axim Biotechnologies

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

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

Diversification Opportunities for Wesana Health and Axim Biotechnologies

-0.15

Correlation Coefficient

Wesana Health  Axim Biotechnologies

Good diversification

The 3 months correlation between Wesana and Axim is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Wesana Health Holdings and Axim Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axim Biotechnologies and Wesana Health 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 Wesana Health Holdings are associated (or correlated) with Axim Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axim Biotechnologies has no effect on the direction of Wesana Health i.e., Wesana Health and Axim Biotechnologies go up and down completely randomly.

Pair Corralation between Wesana Health and Axim Biotechnologies

Assuming the 90 days horizon Wesana Health Holdings is expected to generate 1.92 times more return on investment than Axim Biotechnologies. However, Wesana Health is 1.92 times more volatile than Axim Biotechnologies. It trades about 0.2 of its potential returns per unit of risk. Axim Biotechnologies is currently generating about 0.05 per unit of risk. If you would invest  0.50  in Wesana Health Holdings on September 12, 2024 and sell it today you would earn a total of  0.73  from holding Wesana Health Holdings or generate 146.0% return on investment over 90 days.

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

Wesana Health Holdings  vs.  Axim Biotechnologies

Wesana Health Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wesana Health Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Wesana Health reported solid returns over the last few months and may actually be approaching a breakup point.

Axim Biotechnologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Axim Biotechnologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Axim Biotechnologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wesana Health and Axim Biotechnologies

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

The idea behind Wesana Health Holdings and Axim Biotechnologies 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.