Correlation Between CMC Magnetics and WUS Printed

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

By analyzing existing cross correlation between CMC Magnetics Corp and WUS Printed Circuit, you can compare the effects of market volatilities on CMC Magnetics and WUS Printed 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 CMC Magnetics with a short position of WUS Printed. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Magnetics and WUS Printed.

Diversification Opportunities for CMC Magnetics and WUS Printed

0.35

Correlation Coefficient

CMC Magnetics  WUS Printed

Weak diversification

The 3 months correlation between CMC and WUS is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding CMC Magnetics Corp and WUS Printed Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WUS Printed Circuit and CMC Magnetics 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 CMC Magnetics Corp are associated (or correlated) with WUS Printed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WUS Printed Circuit has no effect on the direction of CMC Magnetics i.e., CMC Magnetics and WUS Printed go up and down completely randomly.

Pair Corralation between CMC Magnetics and WUS Printed

Assuming the 90 days trading horizon CMC Magnetics Corp is expected to under-perform the WUS Printed. But the stock apears to be less risky and, when comparing its historical volatility, CMC Magnetics Corp is 1.03 times less risky than WUS Printed. The stock trades about -0.1 of its potential returns per unit of risk. The WUS Printed Circuit is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  4,855  in WUS Printed Circuit on December 27, 2024 and sell it today you would lose (305.00) from holding WUS Printed Circuit or give up 6.28% of portfolio value over 90 days.

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

CMC Magnetics Corp  vs.  WUS Printed Circuit

CMC Magnetics Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days CMC Magnetics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

WUS Printed Circuit

Risk-Adjusted Performance

Very Weak

Over the last 90 days WUS Printed Circuit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with CMC Magnetics and WUS Printed

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

The idea behind CMC Magnetics Corp and WUS Printed Circuit 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.