Correlation Between Wendys and SUPER HI

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

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

Diversification Opportunities for Wendys and SUPER HI

0.57

Correlation Coefficient

Wendys  SUPER HI

Very weak diversification

The 3 months correlation between Wendys and SUPER is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and SUPER HI INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUPER HI INTERNATIONAL and Wendys 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 The Wendys Co are associated (or correlated) with SUPER HI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUPER HI INTERNATIONAL has no effect on the direction of Wendys i.e., Wendys and SUPER HI go up and down completely randomly.

Pair Corralation between Wendys and SUPER HI

Considering the 90-day investment horizon The Wendys Co is expected to generate 0.46 times more return on investment than SUPER HI. However, The Wendys Co is 2.16 times less risky than SUPER HI. It trades about -0.04 of its potential returns per unit of risk. SUPER HI INTERNATIONAL is currently generating about -0.02 per unit of risk. If you would invest  1,630  in The Wendys Co on December 19, 2024 and sell it today you would lose (83.00) from holding The Wendys Co or give up 5.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

The Wendys Co  vs.  SUPER HI INTERNATIONAL

The Wendys

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Wendys Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Wendys is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

SUPER HI INTERNATIONAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days SUPER HI INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, SUPER HI is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Wendys and SUPER HI

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

The idea behind The Wendys Co and SUPER HI INTERNATIONAL 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.