Correlation Between Remgro and We Buy

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

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

Diversification Opportunities for Remgro and We Buy

0.0

Correlation Coefficient

Remgro  We Buy

Pay attention - limited upside

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

Pair Corralation between Remgro and We Buy

If you would invest  349,987  in We Buy Cars on October 27, 2024 and sell it today you would earn a total of  63,013  from holding We Buy Cars or generate 18.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Remgro  vs.  We Buy Cars

Remgro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Remgro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Remgro is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

We Buy Cars

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in We Buy Cars are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, We Buy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Remgro and We Buy

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

The idea behind Remgro and We Buy Cars 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.