Correlation Between Answer Technology and WPG Holdings

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

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

Diversification Opportunities for Answer Technology and WPG Holdings

0.0

Correlation Coefficient

Answer Technology  WPG Holdings

Pay attention - limited upside

The 3 months correlation between Answer and WPG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Answer Technology Co and WPG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPG Holdings and Answer Technology 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 Answer Technology Co are associated (or correlated) with WPG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPG Holdings has no effect on the direction of Answer Technology i.e., Answer Technology and WPG Holdings go up and down completely randomly.

Pair Corralation between Answer Technology and WPG Holdings

If you would invest  5,080  in Answer Technology Co on December 21, 2024 and sell it today you would earn a total of  3,690  from holding Answer Technology Co or generate 72.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Answer Technology Co  vs.  WPG Holdings

Answer Technology

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Answer Technology Co are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Answer Technology showed solid returns over the last few months and may actually be approaching a breakup point.

WPG Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days WPG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, WPG Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Answer Technology and WPG Holdings

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

The idea behind Answer Technology Co and WPG Holdings 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.