Correlation Between Witbe Net and Chargeurs

Can any of the company-specific risk be diversified away by investing in both Witbe Net and Chargeurs 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 Chargeurs 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 Chargeurs SA, you can compare the effects of market volatilities on Witbe Net and Chargeurs 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 Chargeurs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Witbe Net and Chargeurs.

Diversification Opportunities for Witbe Net and Chargeurs

-0.3

Correlation Coefficient

Witbe Net  Chargeurs

Very good diversification

The 3 months correlation between Witbe and Chargeurs is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Witbe Net SA and Chargeurs SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chargeurs SA 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 Chargeurs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chargeurs SA has no effect on the direction of Witbe Net i.e., Witbe Net and Chargeurs go up and down completely randomly.

Pair Corralation between Witbe Net and Chargeurs

Assuming the 90 days trading horizon Witbe Net SA is expected to under-perform the Chargeurs. In addition to that, Witbe Net is 1.14 times more volatile than Chargeurs SA. It trades about -0.06 of its total potential returns per unit of risk. Chargeurs SA is currently generating about 0.01 per unit of volatility. If you would invest  1,100  in Chargeurs SA on October 24, 2024 and sell it today you would lose (52.00) from holding Chargeurs SA or give up 4.73% of portfolio value over 90 days.

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

Witbe Net SA  vs.  Chargeurs SA

Witbe Net SA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Witbe Net SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Witbe Net reported solid returns over the last few months and may actually be approaching a breakup point.

Chargeurs SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Witbe Net and Chargeurs

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

The idea behind Witbe Net SA and Chargeurs 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.