Correlation Between Wetouch Technology and PVA TePla

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

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

Diversification Opportunities for Wetouch Technology and PVA TePla

0.69

Correlation Coefficient

Wetouch Technology  PVA TePla

Poor diversification

The 3 months correlation between Wetouch and PVA is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Wetouch Technology Common and PVA TePla AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVA TePla AG and Wetouch Technology 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 Wetouch Technology Common are associated (or correlated) with PVA TePla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVA TePla AG has no effect on the direction of Wetouch Technology i.e., Wetouch Technology and PVA TePla go up and down completely randomly.

Pair Corralation between Wetouch Technology and PVA TePla

Given the investment horizon of 90 days Wetouch Technology Common is expected to generate 2.42 times more return on investment than PVA TePla. However, Wetouch Technology is 2.42 times more volatile than PVA TePla AG. It trades about 0.02 of its potential returns per unit of risk. PVA TePla AG is currently generating about -0.04 per unit of risk. If you would invest  176.00  in Wetouch Technology Common on September 21, 2024 and sell it today you would lose (8.00) from holding Wetouch Technology Common or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Wetouch Technology Common  vs.  PVA TePla AG

Wetouch Technology Common

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wetouch Technology Common are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Wetouch Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PVA TePla AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PVA TePla AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Wetouch Technology and PVA TePla

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

The idea behind Wetouch Technology Common and PVA TePla AG 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.