Correlation Between AOYAMA TRADING and Workiva

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

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

Diversification Opportunities for AOYAMA TRADING and Workiva

0.07

Correlation Coefficient

AOYAMA TRADING  Workiva

Significant diversification

The 3 months correlation between AOYAMA and Workiva is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding AOYAMA TRADING and Workiva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workiva and AOYAMA TRADING 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 AOYAMA TRADING are associated (or correlated) with Workiva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workiva has no effect on the direction of AOYAMA TRADING i.e., AOYAMA TRADING and Workiva go up and down completely randomly.

Pair Corralation between AOYAMA TRADING and Workiva

Assuming the 90 days horizon AOYAMA TRADING is expected to generate 0.38 times more return on investment than Workiva. However, AOYAMA TRADING is 2.63 times less risky than Workiva. It trades about -0.08 of its potential returns per unit of risk. Workiva is currently generating about -0.03 per unit of risk. If you would invest  1,440  in AOYAMA TRADING on December 2, 2024 and sell it today you would lose (90.00) from holding AOYAMA TRADING or give up 6.25% of portfolio value over 90 days.

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

AOYAMA TRADING  vs.  Workiva

AOYAMA TRADING

Risk-Adjusted Performance

Very Weak

Over the last 90 days AOYAMA TRADING has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AOYAMA TRADING is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Workiva

Risk-Adjusted Performance

Very Weak

Over the last 90 days Workiva has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with AOYAMA TRADING and Workiva

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

The idea behind AOYAMA TRADING and Workiva 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.