Correlation Between Waga Energy and Ipsos SA

Can any of the company-specific risk be diversified away by investing in both Waga Energy and Ipsos SA 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 Ipsos SA 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 Ipsos SA, you can compare the effects of market volatilities on Waga Energy and Ipsos SA 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 Ipsos SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waga Energy and Ipsos SA.

Diversification Opportunities for Waga Energy and Ipsos SA

-0.18

Correlation Coefficient

Waga Energy  Ipsos SA

Good diversification

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

Pair Corralation between Waga Energy and Ipsos SA

Assuming the 90 days trading horizon Waga Energy SA is expected to under-perform the Ipsos SA. But the stock apears to be less risky and, when comparing its historical volatility, Waga Energy SA is 1.79 times less risky than Ipsos SA. The stock trades about -0.35 of its potential returns per unit of risk. The Ipsos SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,580  in Ipsos SA on December 1, 2024 and sell it today you would earn a total of  208.00  from holding Ipsos SA or generate 4.54% return on investment over 90 days.

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

Waga Energy SA  vs.  Ipsos SA

Waga Energy SA

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ipsos SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ipsos SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ipsos SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Waga Energy and Ipsos SA

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

The idea behind Waga Energy SA and Ipsos SA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.