Correlation Between Ross Stores and Weiss Korea

Can any of the company-specific risk be diversified away by investing in both Ross Stores and Weiss Korea 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 Ross Stores and Weiss Korea into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ross Stores and Weiss Korea Opportunity, you can compare the effects of market volatilities on Ross Stores and Weiss Korea 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 Ross Stores with a short position of Weiss Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Weiss Korea.

Diversification Opportunities for Ross Stores and Weiss Korea

-0.75

Correlation Coefficient

Ross Stores  Weiss Korea

Pay attention - limited upside

The 3 months correlation between Ross and Weiss is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Weiss Korea Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weiss Korea Opportunity and Ross Stores 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 Ross Stores are associated (or correlated) with Weiss Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weiss Korea Opportunity has no effect on the direction of Ross Stores i.e., Ross Stores and Weiss Korea go up and down completely randomly.

Pair Corralation between Ross Stores and Weiss Korea

Assuming the 90 days trading horizon Ross Stores is expected to generate 1.01 times more return on investment than Weiss Korea. However, Ross Stores is 1.01 times more volatile than Weiss Korea Opportunity. It trades about 0.11 of its potential returns per unit of risk. Weiss Korea Opportunity is currently generating about -0.18 per unit of risk. If you would invest  13,985  in Ross Stores on October 5, 2024 and sell it today you would earn a total of  1,358  from holding Ross Stores or generate 9.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Ross Stores  vs.  Weiss Korea Opportunity

Ross Stores

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ross Stores may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Weiss Korea Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weiss Korea Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ross Stores and Weiss Korea

The main advantage of trading using opposite Ross Stores and Weiss Korea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Weiss Korea 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 Weiss Korea will offset losses from the drop in Weiss Korea's long position.

The idea behind Ross Stores and Weiss Korea Opportunity 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.