Correlation Between Winfarm and Prodways Group

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

By analyzing existing cross correlation between Winfarm and Prodways Group SA, you can compare the effects of market volatilities on Winfarm and Prodways Group 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 Prodways Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winfarm and Prodways Group.

Diversification Opportunities for Winfarm and Prodways Group

0.36

Correlation Coefficient

Winfarm  Prodways Group

Weak diversification

The 3 months correlation between Winfarm and Prodways is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Winfarm and Prodways Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prodways Group 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 Prodways Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prodways Group SA has no effect on the direction of Winfarm i.e., Winfarm and Prodways Group go up and down completely randomly.

Pair Corralation between Winfarm and Prodways Group

Assuming the 90 days trading horizon Winfarm is expected to under-perform the Prodways Group. But the stock apears to be less risky and, when comparing its historical volatility, Winfarm is 1.62 times less risky than Prodways Group. The stock trades about -0.01 of its potential returns per unit of risk. The Prodways Group SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  55.00  in Prodways Group SA on October 9, 2024 and sell it today you would earn a total of  7.00  from holding Prodways Group SA or generate 12.73% return on investment over 90 days.

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

Winfarm  vs.  Prodways Group 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.

Prodways Group SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Prodways Group SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Prodways Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Winfarm and Prodways Group

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

The idea behind Winfarm and Prodways Group 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.