Correlation Between WEBUY GLOBAL and Grocery Outlet

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

By analyzing existing cross correlation between WEBUY GLOBAL LTD and Grocery Outlet Holding, you can compare the effects of market volatilities on WEBUY GLOBAL and Grocery Outlet 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 WEBUY GLOBAL with a short position of Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEBUY GLOBAL and Grocery Outlet.

Diversification Opportunities for WEBUY GLOBAL and Grocery Outlet

0.72

Correlation Coefficient

WEBUY GLOBAL  Grocery Outlet

Poor diversification

The 3 months correlation between WEBUY and Grocery is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding WEBUY GLOBAL LTD and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding and WEBUY GLOBAL 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 WEBUY GLOBAL LTD are associated (or correlated) with Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of WEBUY GLOBAL i.e., WEBUY GLOBAL and Grocery Outlet go up and down completely randomly.

Pair Corralation between WEBUY GLOBAL and Grocery Outlet

Given the investment horizon of 90 days WEBUY GLOBAL LTD is expected to generate 2.63 times more return on investment than Grocery Outlet. However, WEBUY GLOBAL is 2.63 times more volatile than Grocery Outlet Holding. It trades about 0.1 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.05 per unit of risk. If you would invest  16.00  in WEBUY GLOBAL LTD on September 19, 2024 and sell it today you would earn a total of  2.00  from holding WEBUY GLOBAL LTD or generate 12.5% return on investment over 90 days.

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

WEBUY GLOBAL LTD  vs.  Grocery Outlet Holding

WEBUY GLOBAL LTD

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WEBUY GLOBAL LTD are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, WEBUY GLOBAL showed solid returns over the last few months and may actually be approaching a breakup point.

Grocery Outlet Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Grocery Outlet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with WEBUY GLOBAL and Grocery Outlet

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

The idea behind WEBUY GLOBAL LTD and Grocery Outlet Holding 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.