Correlation Between Waaree Energies and Aban Offshore

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

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

Diversification Opportunities for Waaree Energies and Aban Offshore

0.44

Correlation Coefficient

Waaree Energies  Aban Offshore

Very weak diversification

The 3 months correlation between Waaree and Aban is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Waaree Energies Limited and Aban Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aban Offshore Limited and Waaree Energies 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 Waaree Energies Limited are associated (or correlated) with Aban Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aban Offshore Limited has no effect on the direction of Waaree Energies i.e., Waaree Energies and Aban Offshore go up and down completely randomly.

Pair Corralation between Waaree Energies and Aban Offshore

Assuming the 90 days trading horizon Waaree Energies Limited is expected to generate 0.74 times more return on investment than Aban Offshore. However, Waaree Energies Limited is 1.36 times less risky than Aban Offshore. It trades about -0.2 of its potential returns per unit of risk. Aban Offshore Limited is currently generating about -0.15 per unit of risk. If you would invest  293,245  in Waaree Energies Limited on October 24, 2024 and sell it today you would lose (25,905) from holding Waaree Energies Limited or give up 8.83% of portfolio value over 90 days.

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

Waaree Energies Limited  vs.  Aban Offshore Limited

Waaree Energies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Waaree Energies Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Waaree Energies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aban Offshore Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aban Offshore Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Waaree Energies and Aban Offshore

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

The idea behind Waaree Energies Limited and Aban Offshore 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 Commodity Directory module to find actively traded commodities issued by global exchanges.