Correlation Between Wha Yu and Axiomtek

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

By analyzing existing cross correlation between Wha Yu Industrial and Axiomtek Co, you can compare the effects of market volatilities on Wha Yu and Axiomtek 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 Wha Yu with a short position of Axiomtek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wha Yu and Axiomtek.

Diversification Opportunities for Wha Yu and Axiomtek

0.51

Correlation Coefficient

Wha Yu  Axiomtek

Very weak diversification

The 3 months correlation between Wha and Axiomtek is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Wha Yu Industrial and Axiomtek Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axiomtek and Wha Yu 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 Wha Yu Industrial are associated (or correlated) with Axiomtek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axiomtek has no effect on the direction of Wha Yu i.e., Wha Yu and Axiomtek go up and down completely randomly.

Pair Corralation between Wha Yu and Axiomtek

Assuming the 90 days trading horizon Wha Yu is expected to generate 2.6 times less return on investment than Axiomtek. But when comparing it to its historical volatility, Wha Yu Industrial is 1.11 times less risky than Axiomtek. It trades about 0.08 of its potential returns per unit of risk. Axiomtek Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  9,290  in Axiomtek Co on October 8, 2024 and sell it today you would earn a total of  3,010  from holding Axiomtek Co or generate 32.4% return on investment over 90 days.

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

Wha Yu Industrial  vs.  Axiomtek Co

Wha Yu Industrial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wha Yu Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Wha Yu may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Axiomtek

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Axiomtek Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Axiomtek showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wha Yu and Axiomtek

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

The idea behind Wha Yu Industrial and Axiomtek Co 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 Global Correlations module to find global opportunities by holding instruments from different markets.