Correlation Between Warrix Sport and CENTRAL RETAIL

Can any of the company-specific risk be diversified away by investing in both Warrix Sport and CENTRAL RETAIL 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 Warrix Sport and CENTRAL RETAIL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Warrix Sport PCL and CENTRAL RETAIL P, you can compare the effects of market volatilities on Warrix Sport and CENTRAL RETAIL 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 Warrix Sport with a short position of CENTRAL RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warrix Sport and CENTRAL RETAIL.

Diversification Opportunities for Warrix Sport and CENTRAL RETAIL

0.15

Correlation Coefficient

Warrix Sport  CENTRAL RETAIL

Average diversification

The 3 months correlation between Warrix and CENTRAL is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Warrix Sport PCL and CENTRAL RETAIL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTRAL RETAIL P and Warrix Sport 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 Warrix Sport PCL are associated (or correlated) with CENTRAL RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTRAL RETAIL P has no effect on the direction of Warrix Sport i.e., Warrix Sport and CENTRAL RETAIL go up and down completely randomly.

Pair Corralation between Warrix Sport and CENTRAL RETAIL

Assuming the 90 days trading horizon Warrix Sport PCL is expected to generate 1.49 times more return on investment than CENTRAL RETAIL. However, Warrix Sport is 1.49 times more volatile than CENTRAL RETAIL P. It trades about 0.03 of its potential returns per unit of risk. CENTRAL RETAIL P is currently generating about -0.13 per unit of risk. If you would invest  346.00  in Warrix Sport PCL on October 25, 2024 and sell it today you would earn a total of  8.00  from holding Warrix Sport PCL or generate 2.31% return on investment over 90 days.

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

Warrix Sport PCL  vs.  CENTRAL RETAIL P

Warrix Sport PCL

Risk-Adjusted Performance

2 of 100

Weak

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

CENTRAL RETAIL P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CENTRAL RETAIL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Warrix Sport and CENTRAL RETAIL

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

The idea behind Warrix Sport PCL and CENTRAL RETAIL P 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.