Correlation Between Winfarm and Paulic Meunerie

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

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

Diversification Opportunities for Winfarm and Paulic Meunerie

0.27

Correlation Coefficient

Winfarm  Paulic Meunerie

Modest diversification

The 3 months correlation between Winfarm and Paulic is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Winfarm and Paulic Meunerie Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paulic Meunerie Sa and Winfarm 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 Winfarm are associated (or correlated) with Paulic Meunerie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paulic Meunerie Sa has no effect on the direction of Winfarm i.e., Winfarm and Paulic Meunerie go up and down completely randomly.

Pair Corralation between Winfarm and Paulic Meunerie

Assuming the 90 days trading horizon Winfarm is expected to under-perform the Paulic Meunerie. But the stock apears to be less risky and, when comparing its historical volatility, Winfarm is 2.15 times less risky than Paulic Meunerie. The stock trades about -0.02 of its potential returns per unit of risk. The Paulic Meunerie Sa is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  138.00  in Paulic Meunerie Sa on October 23, 2024 and sell it today you would lose (10.00) from holding Paulic Meunerie Sa or give up 7.25% of portfolio value over 90 days.

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

Winfarm  vs.  Paulic Meunerie Sa

Winfarm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Winfarm has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Winfarm is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Paulic Meunerie Sa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paulic Meunerie Sa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Paulic Meunerie is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Winfarm and Paulic Meunerie

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

The idea behind Winfarm and Paulic Meunerie 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.