Correlation Between WPG Holdings and Galaxy Software
Can any of the company-specific risk be diversified away by investing in both WPG Holdings and Galaxy Software 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 WPG Holdings and Galaxy Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WPG Holdings and Galaxy Software Services, you can compare the effects of market volatilities on WPG Holdings and Galaxy Software 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 WPG Holdings with a short position of Galaxy Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPG Holdings and Galaxy Software.
Diversification Opportunities for WPG Holdings and Galaxy Software
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WPG and Galaxy is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding WPG Holdings and Galaxy Software Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Software Services and WPG Holdings 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 WPG Holdings are associated (or correlated) with Galaxy Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Software Services has no effect on the direction of WPG Holdings i.e., WPG Holdings and Galaxy Software go up and down completely randomly.
Pair Corralation between WPG Holdings and Galaxy Software
Assuming the 90 days trading horizon WPG Holdings is expected to generate 1.71 times less return on investment than Galaxy Software. But when comparing it to its historical volatility, WPG Holdings is 6.53 times less risky than Galaxy Software. It trades about 0.14 of its potential returns per unit of risk. Galaxy Software Services is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 12,386 in Galaxy Software Services on September 14, 2024 and sell it today you would earn a total of 2,164 from holding Galaxy Software Services or generate 17.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WPG Holdings vs. Galaxy Software Services
Performance |
| Timeline |
| WPG Holdings |
| Galaxy Software Services |
WPG Holdings and Galaxy Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPG Holdings and Galaxy Software
The main advantage of trading using opposite WPG Holdings and Galaxy Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPG Holdings position performs unexpectedly, Galaxy Software 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 Galaxy Software will offset losses from the drop in Galaxy Software's long position.| WPG Holdings vs. Galaxy Software Services | WPG Holdings vs. IBF Financial Holdings | WPG Holdings vs. Kinsus Interconnect Technology | WPG Holdings vs. Asmedia Technology |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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