Correlation Between SANOK RUBBER and Walmart

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

By analyzing existing cross correlation between SANOK RUBBER ZY and Walmart, you can compare the effects of market volatilities on SANOK RUBBER and Walmart 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 SANOK RUBBER with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANOK RUBBER and Walmart.

Diversification Opportunities for SANOK RUBBER and Walmart

0.21

Correlation Coefficient

SANOK RUBBER  Walmart

Modest diversification

The 3 months correlation between SANOK and Walmart is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding SANOK RUBBER ZY and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and SANOK RUBBER 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 SANOK RUBBER ZY are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of SANOK RUBBER i.e., SANOK RUBBER and Walmart go up and down completely randomly.

Pair Corralation between SANOK RUBBER and Walmart

Assuming the 90 days horizon SANOK RUBBER is expected to generate 7.89 times less return on investment than Walmart. But when comparing it to its historical volatility, SANOK RUBBER ZY is 1.54 times less risky than Walmart. It trades about 0.08 of its potential returns per unit of risk. Walmart is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  7,951  in Walmart on September 18, 2024 and sell it today you would earn a total of  1,086  from holding Walmart or generate 13.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SANOK RUBBER ZY  vs.  Walmart

SANOK RUBBER ZY

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SANOK RUBBER ZY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SANOK RUBBER reported solid returns over the last few months and may actually be approaching a breakup point.

Walmart

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SANOK RUBBER and Walmart

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

The idea behind SANOK RUBBER ZY and Walmart 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.