Correlation Between Change Financial and WiseTech Global
Can any of the company-specific risk be diversified away by investing in both Change Financial and WiseTech Global 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 Change Financial and WiseTech Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Change Financial Limited and WiseTech Global Limited, you can compare the effects of market volatilities on Change Financial and WiseTech Global 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 Change Financial with a short position of WiseTech Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Change Financial and WiseTech Global.
Diversification Opportunities for Change Financial and WiseTech Global
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Change and WiseTech is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Change Financial Limited and WiseTech Global Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseTech Global and Change Financial 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 Change Financial Limited are associated (or correlated) with WiseTech Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseTech Global has no effect on the direction of Change Financial i.e., Change Financial and WiseTech Global go up and down completely randomly.
Pair Corralation between Change Financial and WiseTech Global
Assuming the 90 days trading horizon Change Financial Limited is expected to generate 2.98 times more return on investment than WiseTech Global. However, Change Financial is 2.98 times more volatile than WiseTech Global Limited. It trades about 0.06 of its potential returns per unit of risk. WiseTech Global Limited is currently generating about -0.12 per unit of risk. If you would invest 6.20 in Change Financial Limited on November 6, 2024 and sell it today you would earn a total of 0.20 from holding Change Financial Limited or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Change Financial Limited vs. WiseTech Global Limited
Performance |
| Timeline |
| Change Financial |
| WiseTech Global |
Change Financial and WiseTech Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Change Financial and WiseTech Global
The main advantage of trading using opposite Change Financial and WiseTech Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Change Financial position performs unexpectedly, WiseTech Global 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 WiseTech Global will offset losses from the drop in WiseTech Global's long position.| Change Financial vs. Duketon Mining | Change Financial vs. Sayona Mining | Change Financial vs. Bailador Technology Invest | Change Financial vs. Ora Banda Mining |
| WiseTech Global vs. Inventis | WiseTech Global vs. Pengana Private Equity | WiseTech Global vs. PM Capital Global | WiseTech Global vs. Macquarie Group Ltd |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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