Correlation Between Ascendis Health and We Buy

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

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

Diversification Opportunities for Ascendis Health and We Buy

-0.07

Correlation Coefficient

Ascendis Health  We Buy

Good diversification

The 3 months correlation between Ascendis and WBC is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ascendis Health and We Buy Cars in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on We Buy Cars and Ascendis Health 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 Ascendis Health are associated (or correlated) with We Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of We Buy Cars has no effect on the direction of Ascendis Health i.e., Ascendis Health and We Buy go up and down completely randomly.

Pair Corralation between Ascendis Health and We Buy

Assuming the 90 days trading horizon Ascendis Health is expected to generate 2.21 times more return on investment than We Buy. However, Ascendis Health is 2.21 times more volatile than We Buy Cars. It trades about 0.01 of its potential returns per unit of risk. We Buy Cars is currently generating about 0.0 per unit of risk. If you would invest  8,700  in Ascendis Health on December 27, 2024 and sell it today you would lose (100.00) from holding Ascendis Health or give up 1.15% of portfolio value over 90 days.

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

Ascendis Health  vs.  We Buy Cars

Ascendis Health

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ascendis Health are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Ascendis Health is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

We Buy Cars

Risk-Adjusted Performance

Very Weak

Over the last 90 days We Buy Cars has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, We Buy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ascendis Health and We Buy

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

The idea behind Ascendis Health and We Buy Cars 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.