Correlation Between Wave Entertainment and Workpoint Entertainment
Can any of the company-specific risk be diversified away by investing in both Wave Entertainment and Workpoint Entertainment 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 Wave Entertainment and Workpoint Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wave Entertainment Public and Workpoint Entertainment Public, you can compare the effects of market volatilities on Wave Entertainment and Workpoint Entertainment 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 Wave Entertainment with a short position of Workpoint Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wave Entertainment and Workpoint Entertainment.
Diversification Opportunities for Wave Entertainment and Workpoint Entertainment
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wave and Workpoint is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Wave Entertainment Public and Workpoint Entertainment Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workpoint Entertainment and Wave Entertainment 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 Wave Entertainment Public are associated (or correlated) with Workpoint Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workpoint Entertainment has no effect on the direction of Wave Entertainment i.e., Wave Entertainment and Workpoint Entertainment go up and down completely randomly.
Pair Corralation between Wave Entertainment and Workpoint Entertainment
Assuming the 90 days trading horizon Wave Entertainment Public is expected to generate 1.0 times more return on investment than Workpoint Entertainment. However, Wave Entertainment is 1.0 times more volatile than Workpoint Entertainment Public. It trades about 0.06 of its potential returns per unit of risk. Workpoint Entertainment Public is currently generating about 0.06 per unit of risk. If you would invest 16.00 in Wave Entertainment Public on September 4, 2024 and sell it today you would lose (5.00) from holding Wave Entertainment Public or give up 31.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
Wave Entertainment Public vs. Workpoint Entertainment Public
Performance |
| Timeline |
| Wave Entertainment Public |
| Workpoint Entertainment |
Wave Entertainment and Workpoint Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wave Entertainment and Workpoint Entertainment
The main advantage of trading using opposite Wave Entertainment and Workpoint Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wave Entertainment position performs unexpectedly, Workpoint Entertainment 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 Workpoint Entertainment will offset losses from the drop in Workpoint Entertainment's long position.| Wave Entertainment vs. Vibhavadi Medical Center | Wave Entertainment vs. VGI Public | Wave Entertainment vs. Aqua Public |
| Workpoint Entertainment vs. BEC World Public | Workpoint Entertainment vs. Beauty Community Public | Workpoint Entertainment vs. Major Cineplex Group | Workpoint Entertainment vs. True Public |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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