Correlation Between WELL Health and Asiabasemetals

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

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

Diversification Opportunities for WELL Health and Asiabasemetals

-0.55

Correlation Coefficient

WELL Health  Asiabasemetals

Excellent diversification

The 3 months correlation between WELL and Asiabasemetals is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding WELL Health Technologies and Asiabasemetals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiabasemetals and WELL Health 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 WELL Health Technologies are associated (or correlated) with Asiabasemetals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiabasemetals has no effect on the direction of WELL Health i.e., WELL Health and Asiabasemetals go up and down completely randomly.

Pair Corralation between WELL Health and Asiabasemetals

Assuming the 90 days trading horizon WELL Health Technologies is expected to generate 0.19 times more return on investment than Asiabasemetals. However, WELL Health Technologies is 5.25 times less risky than Asiabasemetals. It trades about 0.48 of its potential returns per unit of risk. Asiabasemetals is currently generating about 0.07 per unit of risk. If you would invest  518.00  in WELL Health Technologies on September 14, 2024 and sell it today you would earn a total of  170.00  from holding WELL Health Technologies or generate 32.82% return on investment over 90 days.

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

WELL Health Technologies  vs.  Asiabasemetals

WELL Health Technologies

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WELL Health Technologies are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, WELL Health displayed solid returns over the last few months and may actually be approaching a breakup point.

Asiabasemetals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asiabasemetals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Asiabasemetals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WELL Health and Asiabasemetals

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

The idea behind WELL Health Technologies and Asiabasemetals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.