Correlation Between Theradiag and Worldline

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

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

Diversification Opportunities for Theradiag and Worldline

-0.58

Correlation Coefficient

Theradiag  Worldline

Excellent diversification

The 3 months correlation between Theradiag and Worldline is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Theradiag SA and Worldline SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldline SA and Theradiag 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 Theradiag SA are associated (or correlated) with Worldline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldline SA has no effect on the direction of Theradiag i.e., Theradiag and Worldline go up and down completely randomly.

Pair Corralation between Theradiag and Worldline

Assuming the 90 days trading horizon Theradiag SA is expected to generate 1.21 times more return on investment than Worldline. However, Theradiag is 1.21 times more volatile than Worldline SA. It trades about 0.08 of its potential returns per unit of risk. Worldline SA is currently generating about -0.06 per unit of risk. If you would invest  30.00  in Theradiag SA on September 2, 2024 and sell it today you would earn a total of  6.00  from holding Theradiag SA or generate 20.0% return on investment over 90 days.

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

Theradiag SA  vs.  Worldline SA

Theradiag SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Theradiag SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Theradiag reported solid returns over the last few months and may actually be approaching a breakup point.

Worldline SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worldline SA 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 basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Theradiag and Worldline

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

The idea behind Theradiag SA and Worldline SA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.