Correlation Between Wialan Technologies and Kawasaki Heavy

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

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

Diversification Opportunities for Wialan Technologies and Kawasaki Heavy

0.6

Correlation Coefficient

Wialan Technologies  Kawasaki Heavy

Poor diversification

The 3 months correlation between Wialan and Kawasaki is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Wialan Technologies and Kawasaki Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kawasaki Heavy Industries and Wialan Technologies 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 Wialan Technologies are associated (or correlated) with Kawasaki Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kawasaki Heavy Industries has no effect on the direction of Wialan Technologies i.e., Wialan Technologies and Kawasaki Heavy go up and down completely randomly.

Pair Corralation between Wialan Technologies and Kawasaki Heavy

Given the investment horizon of 90 days Wialan Technologies is expected to under-perform the Kawasaki Heavy. In addition to that, Wialan Technologies is 2.94 times more volatile than Kawasaki Heavy Industries. It trades about -0.08 of its total potential returns per unit of risk. Kawasaki Heavy Industries is currently generating about 0.14 per unit of volatility. If you would invest  1,535  in Kawasaki Heavy Industries on September 5, 2024 and sell it today you would earn a total of  150.00  from holding Kawasaki Heavy Industries or generate 9.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Wialan Technologies  vs.  Kawasaki Heavy Industries

Wialan Technologies

Risk-Adjusted Performance

1 of 100

Weak

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

Kawasaki Heavy Industries

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kawasaki Heavy Industries are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Kawasaki Heavy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wialan Technologies and Kawasaki Heavy

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

The idea behind Wialan Technologies and Kawasaki Heavy Industries 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.