Correlation Between Wesizwe and Frontier Transport

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

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

Diversification Opportunities for Wesizwe and Frontier Transport

-0.15

Correlation Coefficient

Wesizwe  Frontier Transport

Good diversification

The 3 months correlation between Wesizwe and Frontier is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Wesizwe and Frontier Transport Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Transport and Wesizwe 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 Wesizwe are associated (or correlated) with Frontier Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Transport has no effect on the direction of Wesizwe i.e., Wesizwe and Frontier Transport go up and down completely randomly.

Pair Corralation between Wesizwe and Frontier Transport

Assuming the 90 days trading horizon Wesizwe is expected to under-perform the Frontier Transport. In addition to that, Wesizwe is 1.48 times more volatile than Frontier Transport Holdings. It trades about -0.02 of its total potential returns per unit of risk. Frontier Transport Holdings is currently generating about 0.05 per unit of volatility. If you would invest  58,131  in Frontier Transport Holdings on October 24, 2024 and sell it today you would earn a total of  16,869  from holding Frontier Transport Holdings or generate 29.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Wesizwe  vs.  Frontier Transport Holdings

Wesizwe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wesizwe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Frontier Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontier Transport Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Frontier Transport is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Wesizwe and Frontier Transport

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

The idea behind Wesizwe and Frontier Transport 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.