Correlation Between Western Digital and Ihuman

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

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

Diversification Opportunities for Western Digital and Ihuman

-0.07

Correlation Coefficient

Western Digital  Ihuman

Good diversification

The 3 months correlation between Western and Ihuman is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Ihuman Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ihuman Inc and Western Digital 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 Digital are associated (or correlated) with Ihuman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ihuman Inc has no effect on the direction of Western Digital i.e., Western Digital and Ihuman go up and down completely randomly.

Pair Corralation between Western Digital and Ihuman

Considering the 90-day investment horizon Western Digital is expected to under-perform the Ihuman. In addition to that, Western Digital is 1.12 times more volatile than Ihuman Inc. It trades about -0.06 of its total potential returns per unit of risk. Ihuman Inc is currently generating about 0.14 per unit of volatility. If you would invest  164.00  in Ihuman Inc on September 21, 2024 and sell it today you would earn a total of  12.00  from holding Ihuman Inc or generate 7.32% return on investment over 90 days.

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

Western Digital  vs.  Ihuman Inc

Western Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Ihuman Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ihuman Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, Ihuman may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Western Digital and Ihuman

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

The idea behind Western Digital and Ihuman Inc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.