Correlation Between Western Acquisition and STOAU

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

By analyzing existing cross correlation between Western Acquisition Ventures and STOAU 3649 29 APR 31, you can compare the effects of market volatilities on Western Acquisition and STOAU 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 Western Acquisition with a short position of STOAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and STOAU.

Diversification Opportunities for Western Acquisition and STOAU

0.27

Correlation Coefficient

Western Acquisition  STOAU

Modest diversification

The 3 months correlation between Western and STOAU is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and STOAU 3649 29 APR 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STOAU 3649 29 and Western Acquisition 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 Western Acquisition Ventures are associated (or correlated) with STOAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STOAU 3649 29 has no effect on the direction of Western Acquisition i.e., Western Acquisition and STOAU go up and down completely randomly.

Pair Corralation between Western Acquisition and STOAU

Given the investment horizon of 90 days Western Acquisition Ventures is expected to generate 0.92 times more return on investment than STOAU. However, Western Acquisition Ventures is 1.09 times less risky than STOAU. It trades about 0.05 of its potential returns per unit of risk. STOAU 3649 29 APR 31 is currently generating about -0.04 per unit of risk. If you would invest  1,041  in Western Acquisition Ventures on September 17, 2024 and sell it today you would earn a total of  59.00  from holding Western Acquisition Ventures or generate 5.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	56.92%
Values	Daily Returns

Western Acquisition Ventures  vs.  STOAU 3649 29 APR 31

Western Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Western Acquisition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

STOAU 3649 29

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STOAU 3649 29 APR 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, STOAU is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Western Acquisition and STOAU

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

The idea behind Western Acquisition Ventures and STOAU 3649 29 APR 31 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.