Correlation Between Arbor Technology and WPG Holdings
Can any of the company-specific risk be diversified away by investing in both Arbor 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 Arbor 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 Arbor Technology and WPG Holdings, you can compare the effects of market volatilities on Arbor 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 Arbor Technology with a short position of WPG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Technology and WPG Holdings.
Diversification Opportunities for Arbor Technology and WPG Holdings
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arbor and WPG is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Technology and WPG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPG Holdings and Arbor 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 Arbor Technology 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 Arbor Technology i.e., Arbor Technology and WPG Holdings go up and down completely randomly.
Pair Corralation between Arbor Technology and WPG Holdings
Assuming the 90 days trading horizon Arbor Technology is expected to under-perform the WPG Holdings. In addition to that, Arbor Technology is 6.68 times more volatile than WPG Holdings. It trades about -0.01 of its total potential returns per unit of risk. WPG Holdings is currently generating about 0.11 per unit of volatility. If you would invest 4,447 in WPG Holdings on September 4, 2024 and sell it today you would earn a total of 683.00 from holding WPG Holdings or generate 15.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arbor Technology vs. WPG Holdings
Performance |
| Timeline |
| Arbor Technology |
| WPG Holdings |
Arbor Technology and WPG Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Technology and WPG Holdings
The main advantage of trading using opposite Arbor Technology and WPG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor 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.| Arbor Technology vs. Advantech Co | Arbor Technology vs. Asustek Computer | Arbor Technology vs. Compal Electronics | Arbor Technology vs. WiseChip Semiconductor |
| WPG Holdings vs. Tehmag Foods | WPG Holdings vs. Arima Communications Corp | WPG Holdings vs. WinMate Communication INC | WPG Holdings vs. Mercuries Life Insurance |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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