Correlation Between Answer Technology and WPG Holdings
Can any of the company-specific risk be diversified away by investing in both Answer Technology and WPG Holdings 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 Answer Technology and WPG Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Answer Technology Co and WPG Holdings, you can compare the effects of market volatilities on Answer Technology and WPG Holdings 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 Answer Technology with a short position of WPG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Answer Technology and WPG Holdings.
Diversification Opportunities for Answer Technology and WPG Holdings
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Answer and WPG is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Answer Technology Co and WPG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPG Holdings and Answer 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 Answer Technology Co are associated (or correlated) with WPG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPG Holdings has no effect on the direction of Answer Technology i.e., Answer Technology and WPG Holdings go up and down completely randomly.
Pair Corralation between Answer Technology and WPG Holdings
Assuming the 90 days trading horizon Answer Technology is expected to generate 13.74 times less return on investment than WPG Holdings. In addition to that, Answer Technology is 6.17 times more volatile than WPG Holdings. It trades about 0.0 of its total potential returns per unit of risk. WPG Holdings is currently generating about 0.33 per unit of volatility. If you would invest 5,090 in WPG Holdings on August 30, 2024 and sell it today you would earn a total of 50.00 from holding WPG Holdings or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Answer Technology Co vs. WPG Holdings
Performance |
| Timeline |
| Answer Technology |
| WPG Holdings |
Answer Technology and WPG Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Answer Technology and WPG Holdings
The main advantage of trading using opposite Answer Technology and WPG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Answer Technology position performs unexpectedly, WPG Holdings 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 WPG Holdings will offset losses from the drop in WPG Holdings' long position.| Answer Technology vs. Xander International | Answer Technology vs. MetaTech AP | Answer Technology vs. Niching Industrial | Answer Technology vs. Sentronic International |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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