Correlation Between Macauto Industrial and Wellell

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

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

Diversification Opportunities for Macauto Industrial and Wellell

0.57

Correlation Coefficient

Macauto Industrial  Wellell

Very weak diversification

The 3 months correlation between Macauto and Wellell is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Macauto Industrial Co and Wellell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wellell and Macauto Industrial 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 Macauto Industrial Co are associated (or correlated) with Wellell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wellell has no effect on the direction of Macauto Industrial i.e., Macauto Industrial and Wellell go up and down completely randomly.

Pair Corralation between Macauto Industrial and Wellell

Assuming the 90 days trading horizon Macauto Industrial Co is expected to under-perform the Wellell. But the stock apears to be less risky and, when comparing its historical volatility, Macauto Industrial Co is 1.31 times less risky than Wellell. The stock trades about -0.31 of its potential returns per unit of risk. The Wellell is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,475  in Wellell on October 6, 2024 and sell it today you would earn a total of  15.00  from holding Wellell or generate 0.61% return on investment over 90 days.

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

Macauto Industrial Co  vs.  Wellell

Macauto Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macauto Industrial Co 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Wellell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wellell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Wellell 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 Macauto Industrial and Wellell

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

The idea behind Macauto Industrial Co and Wellell 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.