Correlation Between Indra Sistemas and Widepoint

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

By analyzing existing cross correlation between Indra Sistemas SA and Widepoint C, you can compare the effects of market volatilities on Indra Sistemas and Widepoint 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 Indra Sistemas with a short position of Widepoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indra Sistemas and Widepoint.

Diversification Opportunities for Indra Sistemas and Widepoint

-0.61

Correlation Coefficient

Indra Sistemas  Widepoint

Excellent diversification

The 3 months correlation between Indra and Widepoint is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Indra Sistemas SA and Widepoint C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Widepoint C and Indra Sistemas 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 Indra Sistemas SA are associated (or correlated) with Widepoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Widepoint C has no effect on the direction of Indra Sistemas i.e., Indra Sistemas and Widepoint go up and down completely randomly.

Pair Corralation between Indra Sistemas and Widepoint

Assuming the 90 days horizon Indra Sistemas SA is expected to under-perform the Widepoint. But the pink sheet apears to be less risky and, when comparing its historical volatility, Indra Sistemas SA is 8.77 times less risky than Widepoint. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Widepoint C is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  354.00  in Widepoint C on September 28, 2024 and sell it today you would earn a total of  133.00  from holding Widepoint C or generate 37.57% return on investment over 90 days.

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

Indra Sistemas SA  vs.  Widepoint C

Indra Sistemas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indra Sistemas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of 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.

Widepoint C

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Widepoint C are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Widepoint showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indra Sistemas and Widepoint

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

The idea behind Indra Sistemas SA and Widepoint C 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.