Correlation Between Wesure Global and Iargento

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

By analyzing existing cross correlation between Wesure Global Tech and Iargento Hi Tech, you can compare the effects of market volatilities on Wesure Global and Iargento 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 Wesure Global with a short position of Iargento. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesure Global and Iargento.

Diversification Opportunities for Wesure Global and Iargento

-0.13

Correlation Coefficient

Wesure Global  Iargento

Good diversification

The 3 months correlation between Wesure and Iargento is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Wesure Global Tech and Iargento Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iargento Hi Tech and Wesure Global 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 Wesure Global Tech are associated (or correlated) with Iargento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iargento Hi Tech has no effect on the direction of Wesure Global i.e., Wesure Global and Iargento go up and down completely randomly.

Pair Corralation between Wesure Global and Iargento

Assuming the 90 days trading horizon Wesure Global Tech is expected to generate 0.65 times more return on investment than Iargento. However, Wesure Global Tech is 1.55 times less risky than Iargento. It trades about 0.46 of its potential returns per unit of risk. Iargento Hi Tech is currently generating about -0.02 per unit of risk. If you would invest  30,230  in Wesure Global Tech on September 3, 2024 and sell it today you would earn a total of  19,510  from holding Wesure Global Tech or generate 64.54% return on investment over 90 days.

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

Wesure Global Tech  vs.  Iargento Hi Tech

Wesure Global Tech

Risk-Adjusted Performance

36 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Wesure Global Tech are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wesure Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Iargento Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iargento Hi Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Iargento is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wesure Global and Iargento

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

The idea behind Wesure Global Tech and Iargento Hi Tech 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.