Correlation Between USWE SPORTS and WI LAN

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Can any of the company-specific risk be diversified away by investing in both USWE SPORTS and WI LAN 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 USWE SPORTS and WI LAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USWE SPORTS AB and WI LAN, you can compare the effects of market volatilities on USWE SPORTS and WI LAN 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 USWE SPORTS with a short position of WI LAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and WI LAN.

Diversification Opportunities for USWE SPORTS and WI LAN

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between USWE and WJL is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and WI LAN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WI LAN and USWE SPORTS 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 USWE SPORTS AB are associated (or correlated) with WI LAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WI LAN has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and WI LAN go up and down completely randomly.

Pair Corralation between USWE SPORTS and WI LAN

Assuming the 90 days horizon USWE SPORTS AB is expected to under-perform the WI LAN. In addition to that, USWE SPORTS is 1.38 times more volatile than WI LAN. It trades about -0.05 of its total potential returns per unit of risk. WI LAN is currently generating about 0.02 per unit of volatility. If you would invest  111.00  in WI LAN on September 14, 2024 and sell it today you would earn a total of  7.00  from holding WI LAN or generate 6.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.64%
ValuesDaily Returns

USWE SPORTS AB  vs.  WI LAN

 Performance 
       Timeline  
USWE SPORTS AB 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in USWE SPORTS AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, USWE SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.
WI LAN 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in WI LAN are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, WI LAN exhibited solid returns over the last few months and may actually be approaching a breakup point.

USWE SPORTS and WI LAN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with USWE SPORTS and WI LAN

The main advantage of trading using opposite USWE SPORTS and WI LAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS position performs unexpectedly, WI LAN 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 WI LAN will offset losses from the drop in WI LAN's long position.
The idea behind USWE SPORTS AB and WI LAN 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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