Correlation Between WESTLIFE FOODWORLD and UFLEX

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

By analyzing existing cross correlation between WESTLIFE FOODWORLD LIMITED and UFLEX Limited, you can compare the effects of market volatilities on WESTLIFE FOODWORLD and UFLEX 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 WESTLIFE FOODWORLD with a short position of UFLEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLIFE FOODWORLD and UFLEX.

Diversification Opportunities for WESTLIFE FOODWORLD and UFLEX

0.66

Correlation Coefficient

WESTLIFE FOODWORLD  UFLEX

Poor diversification

The 3 months correlation between WESTLIFE and UFLEX is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding WESTLIFE FOODWORLD LIMITED and UFLEX Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UFLEX Limited and WESTLIFE FOODWORLD 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 WESTLIFE FOODWORLD LIMITED are associated (or correlated) with UFLEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UFLEX Limited has no effect on the direction of WESTLIFE FOODWORLD i.e., WESTLIFE FOODWORLD and UFLEX go up and down completely randomly.

Pair Corralation between WESTLIFE FOODWORLD and UFLEX

Assuming the 90 days trading horizon WESTLIFE FOODWORLD LIMITED is expected to generate 0.89 times more return on investment than UFLEX. However, WESTLIFE FOODWORLD LIMITED is 1.13 times less risky than UFLEX. It trades about -0.04 of its potential returns per unit of risk. UFLEX Limited is currently generating about -0.2 per unit of risk. If you would invest  81,715  in WESTLIFE FOODWORLD LIMITED on September 4, 2024 and sell it today you would lose (5,250) from holding WESTLIFE FOODWORLD LIMITED or give up 6.42% of portfolio value over 90 days.

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

WESTLIFE FOODWORLD LIMITED  vs.  UFLEX Limited

WESTLIFE FOODWORLD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTLIFE FOODWORLD LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, WESTLIFE FOODWORLD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

UFLEX Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UFLEX Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with WESTLIFE FOODWORLD and UFLEX

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

The idea behind WESTLIFE FOODWORLD LIMITED and UFLEX Limited 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..