Correlation Between Mass Megawat and Wind Works

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

By analyzing existing cross correlation between Mass Megawat Wind and Wind Works Power, you can compare the effects of market volatilities on Mass Megawat and Wind Works 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 Mass Megawat with a short position of Wind Works. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mass Megawat and Wind Works.

Diversification Opportunities for Mass Megawat and Wind Works

0.0

Correlation Coefficient

Mass Megawat  Wind Works

Pay attention - limited upside

The 3 months correlation between Mass and Wind is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mass Megawat Wind and Wind Works Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wind Works Power and Mass Megawat 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 Mass Megawat Wind are associated (or correlated) with Wind Works. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wind Works Power has no effect on the direction of Mass Megawat i.e., Mass Megawat and Wind Works go up and down completely randomly.

Pair Corralation between Mass Megawat and Wind Works

If you would invest  55.00  in Mass Megawat Wind on September 13, 2024 and sell it today you would lose (21.00) from holding Mass Megawat Wind or give up 38.18% of portfolio value over 90 days.

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

Mass Megawat Wind  vs.  Wind Works Power

Mass Megawat Wind

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mass Megawat Wind are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Mass Megawat showed solid returns over the last few months and may actually be approaching a breakup point.

Wind Works Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wind Works Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Wind Works is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Mass Megawat and Wind Works

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

The idea behind Mass Megawat Wind and Wind Works Power 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.