Correlation Between Wafer Works and Coremax Corp

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

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

Diversification Opportunities for Wafer Works and Coremax Corp

-0.06

Correlation Coefficient

Wafer Works  Coremax Corp

Good diversification

The 3 months correlation between Wafer and Coremax is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Wafer Works and Coremax Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coremax Corp and Wafer Works 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 Wafer Works are associated (or correlated) with Coremax Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coremax Corp has no effect on the direction of Wafer Works i.e., Wafer Works and Coremax Corp go up and down completely randomly.

Pair Corralation between Wafer Works and Coremax Corp

Assuming the 90 days trading horizon Wafer Works is expected to under-perform the Coremax Corp. In addition to that, Wafer Works is 1.03 times more volatile than Coremax Corp. It trades about -0.12 of its total potential returns per unit of risk. Coremax Corp is currently generating about -0.02 per unit of volatility. If you would invest  5,870  in Coremax Corp on September 20, 2024 and sell it today you would lose (170.00) from holding Coremax Corp or give up 2.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Wafer Works  vs.  Coremax Corp

Wafer Works

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wafer Works has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Coremax Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Wafer Works and Coremax Corp

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

The idea behind Wafer Works and Coremax Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.