Correlation Between Nukkleus and WiseTech Global

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

By analyzing existing cross correlation between Nukkleus and WiseTech Global Limited, you can compare the effects of market volatilities on Nukkleus and WiseTech Global 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 Nukkleus with a short position of WiseTech Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nukkleus and WiseTech Global.

Diversification Opportunities for Nukkleus and WiseTech Global

0.15

Correlation Coefficient

Nukkleus  WiseTech Global

Average diversification

The 3 months correlation between Nukkleus and WiseTech is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nukkleus and WiseTech Global Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseTech Global and Nukkleus 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 Nukkleus are associated (or correlated) with WiseTech Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseTech Global has no effect on the direction of Nukkleus i.e., Nukkleus and WiseTech Global go up and down completely randomly.

Pair Corralation between Nukkleus and WiseTech Global

Given the investment horizon of 90 days Nukkleus is expected to generate 106.04 times more return on investment than WiseTech Global. However, Nukkleus is 106.04 times more volatile than WiseTech Global Limited. It trades about 0.28 of its potential returns per unit of risk. WiseTech Global Limited is currently generating about -0.22 per unit of risk. If you would invest  156.00  in Nukkleus on October 9, 2024 and sell it today you would earn a total of  2,377  from holding Nukkleus or generate 1523.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Nukkleus  vs.  WiseTech Global Limited

Nukkleus

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nukkleus are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating forward-looking signals, Nukkleus disclosed solid returns over the last few months and may actually be approaching a breakup point.

WiseTech Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WiseTech Global Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical 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.

Pair Trading with Nukkleus and WiseTech Global

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

The idea behind Nukkleus and WiseTech Global Limited 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.