Correlation Between Soft World and Wayi International

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

By analyzing existing cross correlation between Soft World International and Wayi International Digital, you can compare the effects of market volatilities on Soft World and Wayi International 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 Soft World with a short position of Wayi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soft World and Wayi International.

Diversification Opportunities for Soft World and Wayi International

0.15

Correlation Coefficient

Soft World  Wayi International

Average diversification

The 3 months correlation between Soft and Wayi is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Soft World International and Wayi International Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayi International and Soft World 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 Soft World International are associated (or correlated) with Wayi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayi International has no effect on the direction of Soft World i.e., Soft World and Wayi International go up and down completely randomly.

Pair Corralation between Soft World and Wayi International

Assuming the 90 days trading horizon Soft World is expected to generate 9.44 times less return on investment than Wayi International. But when comparing it to its historical volatility, Soft World International is 3.02 times less risky than Wayi International. It trades about 0.03 of its potential returns per unit of risk. Wayi International Digital is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  15,150  in Wayi International Digital on December 21, 2024 and sell it today you would earn a total of  2,400  from holding Wayi International Digital or generate 15.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.21%
Values	Daily Returns

Soft World International  vs.  Wayi International Digital

Soft World International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Soft World International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Soft World is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Wayi International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wayi International Digital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Wayi International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Soft World and Wayi International

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

The idea behind Soft World International and Wayi International Digital 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.