Correlation Between WA1 Resources and MotorCycle Holdings

Can any of the company-specific risk be diversified away by investing in both WA1 Resources and MotorCycle Holdings 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 WA1 Resources and MotorCycle Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WA1 Resources and MotorCycle Holdings, you can compare the effects of market volatilities on WA1 Resources and MotorCycle Holdings 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 WA1 Resources with a short position of MotorCycle Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of WA1 Resources and MotorCycle Holdings.

Diversification Opportunities for WA1 Resources and MotorCycle Holdings

-0.07

Correlation Coefficient

WA1 Resources  MotorCycle Holdings

Good diversification

The 3 months correlation between WA1 and MotorCycle is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding WA1 Resources and MotorCycle Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MotorCycle Holdings and WA1 Resources 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 WA1 Resources are associated (or correlated) with MotorCycle Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MotorCycle Holdings has no effect on the direction of WA1 Resources i.e., WA1 Resources and MotorCycle Holdings go up and down completely randomly.

Pair Corralation between WA1 Resources and MotorCycle Holdings

Assuming the 90 days trading horizon WA1 Resources is expected to generate 1.94 times less return on investment than MotorCycle Holdings. In addition to that, WA1 Resources is 1.66 times more volatile than MotorCycle Holdings. It trades about 0.04 of its total potential returns per unit of risk. MotorCycle Holdings is currently generating about 0.14 per unit of volatility. If you would invest  182.00  in MotorCycle Holdings on December 30, 2024 and sell it today you would earn a total of  37.00  from holding MotorCycle Holdings or generate 20.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

WA1 Resources  vs.  MotorCycle Holdings

WA1 Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WA1 Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WA1 Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

MotorCycle Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MotorCycle Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MotorCycle Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WA1 Resources and MotorCycle Holdings

The main advantage of trading using opposite WA1 Resources and MotorCycle Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WA1 Resources position performs unexpectedly, MotorCycle Holdings 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 MotorCycle Holdings will offset losses from the drop in MotorCycle Holdings' long position.

The idea behind WA1 Resources and MotorCycle 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.