Correlation Between Wirtek AS and Pandora AS

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

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

Diversification Opportunities for Wirtek AS and Pandora AS

-0.58

Correlation Coefficient

Wirtek AS  Pandora AS

Excellent diversification

The 3 months correlation between Wirtek and Pandora is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Wirtek AS and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora AS and Wirtek AS 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 Wirtek AS are associated (or correlated) with Pandora AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora AS has no effect on the direction of Wirtek AS i.e., Wirtek AS and Pandora AS go up and down completely randomly.

Pair Corralation between Wirtek AS and Pandora AS

Assuming the 90 days trading horizon Wirtek AS is expected to under-perform the Pandora AS. In addition to that, Wirtek AS is 1.41 times more volatile than Pandora AS. It trades about -0.13 of its total potential returns per unit of risk. Pandora AS is currently generating about 0.07 per unit of volatility. If you would invest  120,350  in Pandora AS on September 13, 2024 and sell it today you would earn a total of  7,300  from holding Pandora AS or generate 6.07% return on investment over 90 days.

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

Wirtek AS  vs.  Pandora AS

Wirtek AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wirtek AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pandora AS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pandora AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental indicators, Pandora AS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wirtek AS and Pandora AS

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

The idea behind Wirtek AS and Pandora AS 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.