Correlation Between Gapwaves and Waystream Holding

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

By analyzing existing cross correlation between Gapwaves AB Series and Waystream Holding AB, you can compare the effects of market volatilities on Gapwaves and Waystream Holding 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 Gapwaves with a short position of Waystream Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gapwaves and Waystream Holding.

Diversification Opportunities for Gapwaves and Waystream Holding

0.63

Correlation Coefficient

Gapwaves  Waystream Holding

Poor diversification

The 3 months correlation between Gapwaves and Waystream is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Gapwaves AB Series and Waystream Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waystream Holding and Gapwaves 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 Gapwaves AB Series are associated (or correlated) with Waystream Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waystream Holding has no effect on the direction of Gapwaves i.e., Gapwaves and Waystream Holding go up and down completely randomly.

Pair Corralation between Gapwaves and Waystream Holding

Assuming the 90 days trading horizon Gapwaves AB Series is expected to under-perform the Waystream Holding. In addition to that, Gapwaves is 1.79 times more volatile than Waystream Holding AB. It trades about -0.09 of its total potential returns per unit of risk. Waystream Holding AB is currently generating about 0.03 per unit of volatility. If you would invest  1,568  in Waystream Holding AB on September 27, 2024 and sell it today you would earn a total of  18.00  from holding Waystream Holding AB or generate 1.15% return on investment over 90 days.

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

Gapwaves AB Series  vs.  Waystream Holding AB

Gapwaves AB Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gapwaves AB Series has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Waystream Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waystream Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Gapwaves and Waystream Holding

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

The idea behind Gapwaves AB Series and Waystream Holding AB 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.