Correlation Between Compass and Wetouch Technology
Can any of the company-specific risk be diversified away by investing in both Compass and Wetouch Technology 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 Compass and Wetouch Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass and Wetouch Technology Common, you can compare the effects of market volatilities on Compass and Wetouch Technology 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 Compass with a short position of Wetouch Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass and Wetouch Technology.
Diversification Opportunities for Compass and Wetouch Technology
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compass and Wetouch is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Compass and Wetouch Technology Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wetouch Technology Common and Compass 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 Compass are associated (or correlated) with Wetouch Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wetouch Technology Common has no effect on the direction of Compass i.e., Compass and Wetouch Technology go up and down completely randomly.
Pair Corralation between Compass and Wetouch Technology
Given the investment horizon of 90 days Compass is expected to under-perform the Wetouch Technology. But the stock apears to be less risky and, when comparing its historical volatility, Compass is 1.86 times less risky than Wetouch Technology. The stock trades about -0.43 of its potential returns per unit of risk. The Wetouch Technology Common is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 168.00 in Wetouch Technology Common on October 15, 2024 and sell it today you would earn a total of 2.00 from holding Wetouch Technology Common or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass vs. Wetouch Technology Common
Performance |
| Timeline |
| Compass |
| Wetouch Technology Common |
Compass and Wetouch Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass and Wetouch Technology
The main advantage of trading using opposite Compass and Wetouch Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass position performs unexpectedly, Wetouch Technology 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 Wetouch Technology will offset losses from the drop in Wetouch Technology's long position.The idea behind Compass and Wetouch Technology Common 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.| Wetouch Technology vs. Western Capital Resources | Wetouch Technology vs. Tree Island Steel | Wetouch Technology vs. Santeon Group | Wetouch Technology vs. Ferrexpo PLC |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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