Correlation Between WiseTech Global and Advanced Braking
Can any of the company-specific risk be diversified away by investing in both WiseTech Global and Advanced Braking 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 WiseTech Global and Advanced Braking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WiseTech Global Limited and Advanced Braking Technology, you can compare the effects of market volatilities on WiseTech Global and Advanced Braking 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 WiseTech Global with a short position of Advanced Braking. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseTech Global and Advanced Braking.
Diversification Opportunities for WiseTech Global and Advanced Braking
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WiseTech and Advanced is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding WiseTech Global Limited and Advanced Braking Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Braking Tec and WiseTech Global 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 WiseTech Global Limited are associated (or correlated) with Advanced Braking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Braking Tec has no effect on the direction of WiseTech Global i.e., WiseTech Global and Advanced Braking go up and down completely randomly.
Pair Corralation between WiseTech Global and Advanced Braking
Assuming the 90 days trading horizon WiseTech Global is expected to generate 43.52 times less return on investment than Advanced Braking. But when comparing it to its historical volatility, WiseTech Global Limited is 1.32 times less risky than Advanced Braking. It trades about 0.01 of its potential returns per unit of risk. Advanced Braking Technology is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Advanced Braking Technology on November 3, 2024 and sell it today you would earn a total of 0.80 from holding Advanced Braking Technology or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WiseTech Global Limited vs. Advanced Braking Technology
Performance |
| Timeline |
| WiseTech Global |
| Advanced Braking Tec |
WiseTech Global and Advanced Braking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WiseTech Global and Advanced Braking
The main advantage of trading using opposite WiseTech Global and Advanced Braking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseTech Global position performs unexpectedly, Advanced Braking 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 Advanced Braking will offset losses from the drop in Advanced Braking's long position.| WiseTech Global vs. Aneka Tambang Tbk | WiseTech Global vs. Rio Tinto | WiseTech Global vs. BHP Group Limited | WiseTech Global vs. Block Inc |
| Advanced Braking vs. Sports Entertainment Group | Advanced Braking vs. Hutchison Telecommunications | Advanced Braking vs. Actinogen Medical | Advanced Braking vs. ARN Media Limited |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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