Correlation Between Witbe Net and DNXcorp

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

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

Diversification Opportunities for Witbe Net and DNXcorp

-0.42

Correlation Coefficient

Witbe Net  DNXcorp

Very good diversification

The 3 months correlation between Witbe and DNXcorp is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Witbe Net SA and DNXcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DNXcorp and Witbe Net 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 Witbe Net SA are associated (or correlated) with DNXcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DNXcorp has no effect on the direction of Witbe Net i.e., Witbe Net and DNXcorp go up and down completely randomly.

Pair Corralation between Witbe Net and DNXcorp

Assuming the 90 days trading horizon Witbe Net SA is expected to generate 1.87 times more return on investment than DNXcorp. However, Witbe Net is 1.87 times more volatile than DNXcorp. It trades about 0.0 of its potential returns per unit of risk. DNXcorp is currently generating about -0.04 per unit of risk. If you would invest  243.00  in Witbe Net SA on September 17, 2024 and sell it today you would lose (8.00) from holding Witbe Net SA or give up 3.29% of portfolio value over 90 days.

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

Witbe Net SA  vs.  DNXcorp

Witbe Net SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

DNXcorp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Witbe Net and DNXcorp

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

The idea behind Witbe Net SA and DNXcorp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.