Correlation Between Wereldhav and Retail Estates

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

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

Diversification Opportunities for Wereldhav and Retail Estates

0.27

Correlation Coefficient

Wereldhav  Retail Estates

Modest diversification

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

Pair Corralation between Wereldhav and Retail Estates

Assuming the 90 days trading horizon Wereldhav B Sicafi is expected to generate 1.22 times more return on investment than Retail Estates. However, Wereldhav is 1.22 times more volatile than Retail Estates . It trades about 0.14 of its potential returns per unit of risk. Retail Estates is currently generating about -0.01 per unit of risk. If you would invest  4,610  in Wereldhav B Sicafi on December 4, 2024 and sell it today you would earn a total of  450.00  from holding Wereldhav B Sicafi or generate 9.76% return on investment over 90 days.

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

Wereldhav B Sicafi  vs.  Retail Estates

Wereldhav B Sicafi

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wereldhav B Sicafi are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Wereldhav may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Retail Estates

Risk-Adjusted Performance

Very Weak

Over the last 90 days Retail Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Retail Estates is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Wereldhav and Retail Estates

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

The idea behind Wereldhav B Sicafi and Retail Estates 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.