Correlation Between Technos SA and Western Union

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

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

Diversification Opportunities for Technos SA and Western Union

0.18

Correlation Coefficient

Technos SA  Western Union

Average diversification

The 3 months correlation between Technos and Western is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Technos SA and The Western Union in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union and Technos SA 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 Technos SA are associated (or correlated) with Western Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Union has no effect on the direction of Technos SA i.e., Technos SA and Western Union go up and down completely randomly.

Pair Corralation between Technos SA and Western Union

Assuming the 90 days trading horizon Technos SA is expected to generate 2.17 times more return on investment than Western Union. However, Technos SA is 2.17 times more volatile than The Western Union. It trades about 0.06 of its potential returns per unit of risk. The Western Union is currently generating about 0.03 per unit of risk. If you would invest  491.00  in Technos SA on October 7, 2024 and sell it today you would earn a total of  46.00  from holding Technos SA or generate 9.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Technos SA  vs.  The Western Union

Technos SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Technos SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Technos SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Western Union

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Western Union are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Western Union is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Technos SA and Western Union

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

The idea behind Technos SA and The Western Union 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.