Correlation Between Wesfarmers and Ras Technology

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

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

Diversification Opportunities for Wesfarmers and Ras Technology

-0.8

Correlation Coefficient

Wesfarmers  Ras Technology

Pay attention - limited upside

The 3 months correlation between Wesfarmers and Ras is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Wesfarmers and Ras Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ras Technology Holdings and Wesfarmers 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 Wesfarmers are associated (or correlated) with Ras Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ras Technology Holdings has no effect on the direction of Wesfarmers i.e., Wesfarmers and Ras Technology go up and down completely randomly.

Pair Corralation between Wesfarmers and Ras Technology

Assuming the 90 days trading horizon Wesfarmers is expected to under-perform the Ras Technology. But the stock apears to be less risky and, when comparing its historical volatility, Wesfarmers is 1.41 times less risky than Ras Technology. The stock trades about -0.12 of its potential returns per unit of risk. The Ras Technology Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  85.00  in Ras Technology Holdings on October 9, 2024 and sell it today you would earn a total of  7.00  from holding Ras Technology Holdings or generate 8.24% return on investment over 90 days.

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

Wesfarmers  vs.  Ras Technology Holdings

Wesfarmers

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wesfarmers are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Wesfarmers is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ras Technology Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ras Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Wesfarmers and Ras Technology

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

The idea behind Wesfarmers and Ras Technology Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.