Correlation Between Western Investment and Westshore Terminals

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

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

Diversification Opportunities for Western Investment and Westshore Terminals

0.03

Correlation Coefficient

Western Investment  Westshore Terminals

Significant diversification

The 3 months correlation between Western and Westshore is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and Westshore Terminals Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westshore Terminals and Western Investment 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 Western Investment are associated (or correlated) with Westshore Terminals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westshore Terminals has no effect on the direction of Western Investment i.e., Western Investment and Westshore Terminals go up and down completely randomly.

Pair Corralation between Western Investment and Westshore Terminals

Given the investment horizon of 90 days Western Investment is expected to under-perform the Westshore Terminals. In addition to that, Western Investment is 1.57 times more volatile than Westshore Terminals Investment. It trades about -0.01 of its total potential returns per unit of risk. Westshore Terminals Investment is currently generating about 0.09 per unit of volatility. If you would invest  2,255  in Westshore Terminals Investment on December 30, 2024 and sell it today you would earn a total of  217.00  from holding Westshore Terminals Investment or generate 9.62% return on investment over 90 days.

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

Western Investment  vs.  Westshore Terminals Investment

Western Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Western Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Western Investment is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Westshore Terminals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Westshore Terminals Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Westshore Terminals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Western Investment and Westshore Terminals

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

The idea behind Western Investment and Westshore Terminals Investment 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..