Correlation Between Waga Energy and Forsee Power

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

By analyzing existing cross correlation between Waga Energy SA and Forsee Power SAS, you can compare the effects of market volatilities on Waga Energy and Forsee Power 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 Waga Energy with a short position of Forsee Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waga Energy and Forsee Power.

Diversification Opportunities for Waga Energy and Forsee Power

0.65

Correlation Coefficient

Waga Energy  Forsee Power

Poor diversification

The 3 months correlation between Waga and Forsee is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Waga Energy SA and Forsee Power SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forsee Power SAS and Waga Energy 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 Waga Energy SA are associated (or correlated) with Forsee Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forsee Power SAS has no effect on the direction of Waga Energy i.e., Waga Energy and Forsee Power go up and down completely randomly.

Pair Corralation between Waga Energy and Forsee Power

Assuming the 90 days trading horizon Waga Energy SA is expected to generate 0.49 times more return on investment than Forsee Power. However, Waga Energy SA is 2.03 times less risky than Forsee Power. It trades about 0.0 of its potential returns per unit of risk. Forsee Power SAS is currently generating about -0.22 per unit of risk. If you would invest  1,700  in Waga Energy SA on October 11, 2024 and sell it today you would lose (28.00) from holding Waga Energy SA or give up 1.65% of portfolio value over 90 days.

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

Waga Energy SA  vs.  Forsee Power SAS

Waga Energy SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waga Energy SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Waga Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Forsee Power SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forsee Power SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Waga Energy and Forsee Power

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

The idea behind Waga Energy SA and Forsee Power SAS 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.