Correlation Between STRAITS TRADG and WOLFDEN RES
Can any of the company-specific risk be diversified away by investing in both STRAITS TRADG and WOLFDEN RES 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 STRAITS TRADG and WOLFDEN RES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STRAITS TRADG SD and WOLFDEN RES P, you can compare the effects of market volatilities on STRAITS TRADG and WOLFDEN RES 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 STRAITS TRADG with a short position of WOLFDEN RES. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRAITS TRADG and WOLFDEN RES.
Diversification Opportunities for STRAITS TRADG and WOLFDEN RES
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STRAITS and WOLFDEN is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding STRAITS TRADG SD and WOLFDEN RES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOLFDEN RES P and STRAITS TRADG 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 STRAITS TRADG SD are associated (or correlated) with WOLFDEN RES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOLFDEN RES P has no effect on the direction of STRAITS TRADG i.e., STRAITS TRADG and WOLFDEN RES go up and down completely randomly.
Pair Corralation between STRAITS TRADG and WOLFDEN RES
Assuming the 90 days horizon STRAITS TRADG SD is expected to under-perform the WOLFDEN RES. But the stock apears to be less risky and, when comparing its historical volatility, STRAITS TRADG SD is 20.22 times less risky than WOLFDEN RES. The stock trades about -0.03 of its potential returns per unit of risk. The WOLFDEN RES P is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12.00 in WOLFDEN RES P on October 29, 2024 and sell it today you would lose (9.65) from holding WOLFDEN RES P or give up 80.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STRAITS TRADG SD vs. WOLFDEN RES P
Performance |
| Timeline |
| STRAITS TRADG SD |
| WOLFDEN RES P |
STRAITS TRADG and WOLFDEN RES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STRAITS TRADG and WOLFDEN RES
The main advantage of trading using opposite STRAITS TRADG and WOLFDEN RES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRAITS TRADG position performs unexpectedly, WOLFDEN RES 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 WOLFDEN RES will offset losses from the drop in WOLFDEN RES's long position.| STRAITS TRADG vs. TYSON FOODS A | STRAITS TRADG vs. Ebro Foods SA | STRAITS TRADG vs. Erste Group Bank | STRAITS TRADG vs. BANK OF CHINA |
| WOLFDEN RES vs. ETFS Coffee ETC | WOLFDEN RES vs. ZINC MEDIA GR | WOLFDEN RES vs. Tencent Music Entertainment | WOLFDEN RES vs. PROSIEBENSAT1 MEDIADR4 |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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