Correlation Between Wipro Limited and WNS Holdings

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

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

Diversification Opportunities for Wipro Limited and WNS Holdings

0.07

Correlation Coefficient

Wipro Limited  WNS Holdings

Significant diversification

The 3 months correlation between Wipro and WNS is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Wipro Limited ADR and WNS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WNS Holdings and Wipro Limited 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 Wipro Limited ADR are associated (or correlated) with WNS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WNS Holdings has no effect on the direction of Wipro Limited i.e., Wipro Limited and WNS Holdings go up and down completely randomly.

Pair Corralation between Wipro Limited and WNS Holdings

Considering the 90-day investment horizon Wipro Limited ADR is expected to generate 0.69 times more return on investment than WNS Holdings. However, Wipro Limited ADR is 1.44 times less risky than WNS Holdings. It trades about 0.01 of its potential returns per unit of risk. WNS Holdings is currently generating about -0.25 per unit of risk. If you would invest  350.00  in Wipro Limited ADR on October 11, 2024 and sell it today you would earn a total of  1.00  from holding Wipro Limited ADR or generate 0.29% return on investment over 90 days.

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

Wipro Limited ADR  vs.  WNS Holdings

Wipro Limited ADR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wipro Limited ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward indicators, Wipro Limited may actually be approaching a critical reversion point that can send shares even higher in February 2025.

WNS Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WNS Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, WNS Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wipro Limited and WNS Holdings

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

The idea behind Wipro Limited ADR and WNS 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.