Correlation Between Kane Biotech and Wesana Health

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

By analyzing existing cross correlation between Kane Biotech and Wesana Health Holdings, you can compare the effects of market volatilities on Kane Biotech and Wesana Health 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 Kane Biotech with a short position of Wesana Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kane Biotech and Wesana Health.

Diversification Opportunities for Kane Biotech and Wesana Health

-0.1

Correlation Coefficient

Kane Biotech  Wesana Health

Good diversification

The 3 months correlation between Kane and Wesana is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Kane Biotech and Wesana Health Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesana Health Holdings and Kane Biotech 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 Kane Biotech are associated (or correlated) with Wesana Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesana Health Holdings has no effect on the direction of Kane Biotech i.e., Kane Biotech and Wesana Health go up and down completely randomly.

Pair Corralation between Kane Biotech and Wesana Health

Assuming the 90 days horizon Kane Biotech is expected to under-perform the Wesana Health. But the otc stock apears to be less risky and, when comparing its historical volatility, Kane Biotech is 14.4 times less risky than Wesana Health. The otc stock trades about -0.06 of its potential returns per unit of risk. The Wesana Health Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.84  in Wesana Health Holdings on October 13, 2024 and sell it today you would lose (0.57) from holding Wesana Health Holdings or give up 67.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Kane Biotech  vs.  Wesana Health Holdings

Kane Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kane Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Wesana Health Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wesana Health Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Wesana Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kane Biotech and Wesana Health

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

The idea behind Kane Biotech and Wesana Health Holdings 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.