Correlation Between WIMFARM SA and WUXI BIOLOGICS

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

By analyzing existing cross correlation between WIMFARM SA EO and WUXI BIOLOGICS UNSPADR2, you can compare the effects of market volatilities on WIMFARM SA and WUXI BIOLOGICS 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 WIMFARM SA with a short position of WUXI BIOLOGICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIMFARM SA and WUXI BIOLOGICS.

Diversification Opportunities for WIMFARM SA and WUXI BIOLOGICS

0.62

Correlation Coefficient

WIMFARM SA  WUXI BIOLOGICS

Poor diversification

The 3 months correlation between WIMFARM and WUXI is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding WIMFARM SA EO and WUXI BIOLOGICS UNSPADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WUXI BIOLOGICS UNSPADR2 and WIMFARM SA 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 WIMFARM SA EO are associated (or correlated) with WUXI BIOLOGICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WUXI BIOLOGICS UNSPADR2 has no effect on the direction of WIMFARM SA i.e., WIMFARM SA and WUXI BIOLOGICS go up and down completely randomly.

Pair Corralation between WIMFARM SA and WUXI BIOLOGICS

Assuming the 90 days horizon WIMFARM SA is expected to generate 1.92 times less return on investment than WUXI BIOLOGICS. In addition to that, WIMFARM SA is 1.01 times more volatile than WUXI BIOLOGICS UNSPADR2. It trades about 0.05 of its total potential returns per unit of risk. WUXI BIOLOGICS UNSPADR2 is currently generating about 0.09 per unit of volatility. If you would invest  384.00  in WUXI BIOLOGICS UNSPADR2 on October 23, 2024 and sell it today you would earn a total of  78.00  from holding WUXI BIOLOGICS UNSPADR2 or generate 20.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

WIMFARM SA EO  vs.  WUXI BIOLOGICS UNSPADR2

WIMFARM SA EO

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, WIMFARM SA reported solid returns over the last few months and may actually be approaching a breakup point.

WUXI BIOLOGICS UNSPADR2

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WUXI BIOLOGICS UNSPADR2 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WUXI BIOLOGICS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WIMFARM SA and WUXI BIOLOGICS

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

The idea behind WIMFARM SA EO and WUXI BIOLOGICS UNSPADR2 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.