Correlation Between WEBUY GLOBAL and International Paper

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

Diversification Opportunities for WEBUY GLOBAL and International Paper

0.69

Correlation Coefficient

WEBUY GLOBAL  International Paper

Poor diversification

The 3 months correlation between WEBUY and International is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding WEBUY GLOBAL LTD and International Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Paper 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 International Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Paper has no effect on the direction of WEBUY GLOBAL i.e., WEBUY GLOBAL and International Paper go up and down completely randomly.

Pair Corralation between WEBUY GLOBAL and International Paper

Given the investment horizon of 90 days WEBUY GLOBAL LTD is expected to generate 7.19 times more return on investment than International Paper. However, WEBUY GLOBAL is 7.19 times more volatile than International Paper. It trades about -0.01 of its potential returns per unit of risk. International Paper is currently generating about -0.34 per unit of risk. If you would invest  19.00  in WEBUY GLOBAL LTD on October 4, 2024 and sell it today you would lose (1.70) from holding WEBUY GLOBAL LTD or give up 8.95% of portfolio value over 90 days.

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

WEBUY GLOBAL LTD  vs.  International Paper

WEBUY GLOBAL LTD

Risk-Adjusted Performance

5 of 100

Modest

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.

International Paper

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Paper are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, International Paper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WEBUY GLOBAL and International Paper

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

The idea behind WEBUY GLOBAL LTD and International Paper 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.