Correlation Between Armada Hflr and Wintec

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

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

Diversification Opportunities for Armada Hflr and Wintec

0.19

Correlation Coefficient

Armada Hflr  Wintec

Average diversification

The 3 months correlation between Armada and Wintec is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Wintec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintec and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Wintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wintec has no effect on the direction of Armada Hflr i.e., Armada Hflr and Wintec go up and down completely randomly.

Pair Corralation between Armada Hflr and Wintec

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Wintec. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.96 times less risky than Wintec. The stock trades about -0.22 of its potential returns per unit of risk. The Wintec Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  236,500  in Wintec Co on December 24, 2024 and sell it today you would earn a total of  23,500  from holding Wintec Co or generate 9.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Armada Hflr Pr  vs.  Wintec Co

Armada Hflr Pr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Wintec

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wintec Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wintec sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and Wintec

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

The idea behind Armada Hflr Pr and Wintec Co 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.