Correlation Between DEAP CAPITAL and WEMA BANK

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

By analyzing existing cross correlation between DEAP CAPITAL MANAGEMENT and WEMA BANK PLC, you can compare the effects of market volatilities on DEAP CAPITAL and WEMA BANK 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 DEAP CAPITAL with a short position of WEMA BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of DEAP CAPITAL and WEMA BANK.

Diversification Opportunities for DEAP CAPITAL and WEMA BANK

-0.03

Correlation Coefficient

DEAP CAPITAL  WEMA BANK

Good diversification

The 3 months correlation between DEAP and WEMA is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding DEAP CAPITAL MANAGEMENT and WEMA BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEMA BANK PLC and DEAP CAPITAL 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 DEAP CAPITAL MANAGEMENT are associated (or correlated) with WEMA BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEMA BANK PLC has no effect on the direction of DEAP CAPITAL i.e., DEAP CAPITAL and WEMA BANK go up and down completely randomly.

Pair Corralation between DEAP CAPITAL and WEMA BANK

Assuming the 90 days trading horizon DEAP CAPITAL MANAGEMENT is expected to under-perform the WEMA BANK. In addition to that, DEAP CAPITAL is 1.49 times more volatile than WEMA BANK PLC. It trades about -0.05 of its total potential returns per unit of risk. WEMA BANK PLC is currently generating about 0.19 per unit of volatility. If you would invest  780.00  in WEMA BANK PLC on October 24, 2024 and sell it today you would earn a total of  270.00  from holding WEMA BANK PLC or generate 34.62% return on investment over 90 days.

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

DEAP CAPITAL MANAGEMENT  vs.  WEMA BANK PLC

DEAP CAPITAL MANAGEMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DEAP CAPITAL MANAGEMENT has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

WEMA BANK PLC

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WEMA BANK PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, WEMA BANK displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DEAP CAPITAL and WEMA BANK

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

The idea behind DEAP CAPITAL MANAGEMENT and WEMA BANK PLC 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.