Correlation Between Dynamic Medical and WPG Holdings

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

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

Diversification Opportunities for Dynamic Medical and WPG Holdings

0.03

Correlation Coefficient

Dynamic Medical  WPG Holdings

Significant diversification

The 3 months correlation between Dynamic and WPG is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Medical Technologies and WPG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPG Holdings and Dynamic Medical 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 Dynamic Medical Technologies 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 Dynamic Medical i.e., Dynamic Medical and WPG Holdings go up and down completely randomly.

Pair Corralation between Dynamic Medical and WPG Holdings

Assuming the 90 days trading horizon Dynamic Medical is expected to generate 1.53 times less return on investment than WPG Holdings. In addition to that, Dynamic Medical is 12.06 times more volatile than WPG Holdings. It trades about 0.01 of its total potential returns per unit of risk. WPG Holdings is currently generating about 0.22 per unit of volatility. If you would invest  5,090  in WPG Holdings on October 25, 2024 and sell it today you would earn a total of  80.00  from holding WPG Holdings or generate 1.57% return on investment over 90 days.

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

Dynamic Medical Technologies  vs.  WPG Holdings

Dynamic Medical Tech

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Dynamic Medical Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Dynamic Medical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

WPG Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WPG Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. 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 Dynamic Medical and WPG Holdings

The main advantage of trading using opposite Dynamic Medical and WPG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynamic Medical 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 Dynamic Medical Technologies 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.