Correlation Between Ferrexpo PLC and Wetouch Technology

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

By analyzing existing cross correlation between Ferrexpo PLC and Wetouch Technology Common, you can compare the effects of market volatilities on Ferrexpo PLC and Wetouch Technology 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 Ferrexpo PLC with a short position of Wetouch Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrexpo PLC and Wetouch Technology.

Diversification Opportunities for Ferrexpo PLC and Wetouch Technology

0.32

Correlation Coefficient

Ferrexpo PLC  Wetouch Technology

Weak diversification

The 3 months correlation between Ferrexpo and Wetouch is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo PLC and Wetouch Technology Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wetouch Technology Common and Ferrexpo PLC 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 Ferrexpo PLC are associated (or correlated) with Wetouch Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wetouch Technology Common has no effect on the direction of Ferrexpo PLC i.e., Ferrexpo PLC and Wetouch Technology go up and down completely randomly.

Pair Corralation between Ferrexpo PLC and Wetouch Technology

Assuming the 90 days horizon Ferrexpo PLC is expected to generate 2.52 times more return on investment than Wetouch Technology. However, Ferrexpo PLC is 2.52 times more volatile than Wetouch Technology Common. It trades about 0.06 of its potential returns per unit of risk. Wetouch Technology Common is currently generating about -0.02 per unit of risk. If you would invest  95.00  in Ferrexpo PLC on November 29, 2024 and sell it today you would earn a total of  3.00  from holding Ferrexpo PLC or generate 3.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Ferrexpo PLC  vs.  Wetouch Technology Common

Ferrexpo PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ferrexpo PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ferrexpo PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Wetouch Technology Common

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wetouch Technology Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Wetouch Technology is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ferrexpo PLC and Wetouch Technology

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

The idea behind Ferrexpo PLC and Wetouch Technology Common 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.