Correlation Between Wendel and Akwel SA
Can any of the company-specific risk be diversified away by investing in both Wendel and Akwel SA 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 Wendel and Akwel SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wendel and Akwel SA, you can compare the effects of market volatilities on Wendel and Akwel SA 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 Wendel with a short position of Akwel SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendel and Akwel SA.
Diversification Opportunities for Wendel and Akwel SA
Excellent diversification
The 3 months correlation between Wendel and Akwel is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Wendel and Akwel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akwel SA and Wendel 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 Wendel are associated (or correlated) with Akwel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akwel SA has no effect on the direction of Wendel i.e., Wendel and Akwel SA go up and down completely randomly.
Pair Corralation between Wendel and Akwel SA
Assuming the 90 days horizon Wendel is expected to generate 0.62 times more return on investment than Akwel SA. However, Wendel is 1.6 times less risky than Akwel SA. It trades about 0.02 of its potential returns per unit of risk. Akwel SA is currently generating about -0.05 per unit of risk. If you would invest 8,819 in Wendel on August 28, 2024 and sell it today you would earn a total of 606.00 from holding Wendel or generate 6.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wendel vs. Akwel SA
Performance |
| Timeline |
| Wendel |
| Akwel SA |
Wendel and Akwel SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wendel and Akwel SA
The main advantage of trading using opposite Wendel and Akwel SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendel position performs unexpectedly, Akwel SA 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 Akwel SA will offset losses from the drop in Akwel SA's long position.The idea behind Wendel and Akwel SA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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