Correlation Between International Business and WUXI BIOLOGICS

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

By analyzing existing cross correlation between International Business Machines and WUXI BIOLOGICS UNSPADR2, you can compare the effects of market volatilities on International Business and WUXI BIOLOGICS 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 International Business with a short position of WUXI BIOLOGICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and WUXI BIOLOGICS.

Diversification Opportunities for International Business and WUXI BIOLOGICS

0.11

Correlation Coefficient

International Business  WUXI BIOLOGICS

Average diversification

The 3 months correlation between International and WUXI is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and WUXI BIOLOGICS UNSPADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WUXI BIOLOGICS UNSPADR2 and International Business 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 International Business Machines are associated (or correlated) with WUXI BIOLOGICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WUXI BIOLOGICS UNSPADR2 has no effect on the direction of International Business i.e., International Business and WUXI BIOLOGICS go up and down completely randomly.

Pair Corralation between International Business and WUXI BIOLOGICS

Considering the 90-day investment horizon International Business Machines is expected to under-perform the WUXI BIOLOGICS. But the stock apears to be less risky and, when comparing its historical volatility, International Business Machines is 3.05 times less risky than WUXI BIOLOGICS. The stock trades about -0.01 of its potential returns per unit of risk. The WUXI BIOLOGICS UNSPADR2 is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  472.00  in WUXI BIOLOGICS UNSPADR2 on October 4, 2024 and sell it today you would lose (34.00) from holding WUXI BIOLOGICS UNSPADR2 or give up 7.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

International Business Machine  vs.  WUXI BIOLOGICS UNSPADR2

International Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Business Machines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, International Business is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

WUXI BIOLOGICS UNSPADR2

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WUXI BIOLOGICS UNSPADR2 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, WUXI BIOLOGICS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with International Business and WUXI BIOLOGICS

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

The idea behind International Business Machines and WUXI BIOLOGICS UNSPADR2 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.