Correlation Between CREDITACCESS GRAMEEN and Wonder Electricals

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

By analyzing existing cross correlation between CREDITACCESS GRAMEEN LIMITED and Wonder Electricals Limited, you can compare the effects of market volatilities on CREDITACCESS GRAMEEN and Wonder Electricals 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 CREDITACCESS GRAMEEN with a short position of Wonder Electricals. Check out your portfolio center. Please also check ongoing floating volatility patterns of CREDITACCESS GRAMEEN and Wonder Electricals.

Diversification Opportunities for CREDITACCESS GRAMEEN and Wonder Electricals

0.09

Correlation Coefficient

CREDITACCESS GRAMEEN  Wonder Electricals

Significant diversification

The 3 months correlation between CREDITACCESS and Wonder is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CREDITACCESS GRAMEEN LIMITED and Wonder Electricals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonder Electricals and CREDITACCESS GRAMEEN 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 CREDITACCESS GRAMEEN LIMITED are associated (or correlated) with Wonder Electricals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonder Electricals has no effect on the direction of CREDITACCESS GRAMEEN i.e., CREDITACCESS GRAMEEN and Wonder Electricals go up and down completely randomly.

Pair Corralation between CREDITACCESS GRAMEEN and Wonder Electricals

Assuming the 90 days trading horizon CREDITACCESS GRAMEEN LIMITED is expected to under-perform the Wonder Electricals. But the stock apears to be less risky and, when comparing its historical volatility, CREDITACCESS GRAMEEN LIMITED is 1.03 times less risky than Wonder Electricals. The stock trades about 0.0 of its potential returns per unit of risk. The Wonder Electricals Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  14,634  in Wonder Electricals Limited on October 27, 2024 and sell it today you would earn a total of  2,418  from holding Wonder Electricals Limited or generate 16.52% return on investment over 90 days.

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

CREDITACCESS GRAMEEN LIMITED  vs.  Wonder Electricals Limited

CREDITACCESS GRAMEEN

Risk-Adjusted Performance

0 of 100

Weak

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

Wonder Electricals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wonder Electricals Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Wonder Electricals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CREDITACCESS GRAMEEN and Wonder Electricals

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

The idea behind CREDITACCESS GRAMEEN LIMITED and Wonder Electricals Limited 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.