Correlation Between WEMA BANK and FIDSON HEALTHCARE

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

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

Diversification Opportunities for WEMA BANK and FIDSON HEALTHCARE

-0.26

Correlation Coefficient

WEMA BANK  FIDSON HEALTHCARE

Very good diversification

The 3 months correlation between WEMA and FIDSON is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding WEMA BANK PLC and FIDSON HEALTHCARE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIDSON HEALTHCARE PLC and WEMA BANK 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 WEMA BANK PLC are associated (or correlated) with FIDSON HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIDSON HEALTHCARE PLC has no effect on the direction of WEMA BANK i.e., WEMA BANK and FIDSON HEALTHCARE go up and down completely randomly.

Pair Corralation between WEMA BANK and FIDSON HEALTHCARE

Assuming the 90 days trading horizon WEMA BANK PLC is expected to generate 1.03 times more return on investment than FIDSON HEALTHCARE. However, WEMA BANK is 1.03 times more volatile than FIDSON HEALTHCARE PLC. It trades about 0.3 of its potential returns per unit of risk. FIDSON HEALTHCARE PLC is currently generating about 0.09 per unit of risk. If you would invest  870.00  in WEMA BANK PLC on October 6, 2024 and sell it today you would earn a total of  130.00  from holding WEMA BANK PLC or generate 14.94% return on investment over 90 days.

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

WEMA BANK PLC  vs.  FIDSON HEALTHCARE PLC

WEMA BANK PLC

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WEMA BANK PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, WEMA BANK displayed solid returns over the last few months and may actually be approaching a breakup point.

FIDSON HEALTHCARE PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FIDSON HEALTHCARE PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, FIDSON HEALTHCARE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WEMA BANK and FIDSON HEALTHCARE

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

The idea behind WEMA BANK PLC and FIDSON HEALTHCARE PLC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.