Correlation Between Workday and Roadzen

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

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

Diversification Opportunities for Workday and Roadzen

0.45

Correlation Coefficient

Workday  Roadzen

Very weak diversification

The 3 months correlation between Workday and Roadzen is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Workday and Roadzen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roadzen and Workday 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 Workday are associated (or correlated) with Roadzen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roadzen has no effect on the direction of Workday i.e., Workday and Roadzen go up and down completely randomly.

Pair Corralation between Workday and Roadzen

Given the investment horizon of 90 days Workday is expected to generate 25.21 times less return on investment than Roadzen. But when comparing it to its historical volatility, Workday is 5.94 times less risky than Roadzen. It trades about 0.04 of its potential returns per unit of risk. Roadzen is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  90.00  in Roadzen on October 9, 2024 and sell it today you would earn a total of  112.00  from holding Roadzen or generate 124.44% return on investment over 90 days.

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

Workday  vs.  Roadzen

Workday

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Workday are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Workday is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Roadzen

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Roadzen are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Roadzen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Workday and Roadzen

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

The idea behind Workday and Roadzen 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.