Correlation Between Wialan Technologies and Sandvik AB

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

By analyzing existing cross correlation between Wialan Technologies and Sandvik AB ADR, you can compare the effects of market volatilities on Wialan Technologies and Sandvik AB 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 Sandvik AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wialan Technologies and Sandvik AB.

Diversification Opportunities for Wialan Technologies and Sandvik AB

-0.35

Correlation Coefficient

Wialan Technologies  Sandvik AB

Very good diversification

The 3 months correlation between Wialan and Sandvik is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Wialan Technologies and Sandvik AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandvik AB ADR 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 Sandvik AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandvik AB ADR has no effect on the direction of Wialan Technologies i.e., Wialan Technologies and Sandvik AB go up and down completely randomly.

Pair Corralation between Wialan Technologies and Sandvik AB

Given the investment horizon of 90 days Wialan Technologies is expected to generate 4.28 times more return on investment than Sandvik AB. However, Wialan Technologies is 4.28 times more volatile than Sandvik AB ADR. It trades about 0.08 of its potential returns per unit of risk. Sandvik AB ADR is currently generating about 0.16 per unit of risk. If you would invest  0.08  in Wialan Technologies on December 29, 2024 and sell it today you would earn a total of  0.02  from holding Wialan Technologies or generate 25.0% return on investment over 90 days.

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

Wialan Technologies  vs.  Sandvik AB ADR

Wialan Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wialan Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Wialan Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Sandvik AB ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sandvik AB ADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, Sandvik AB showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wialan Technologies and Sandvik AB

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

The idea behind Wialan Technologies and Sandvik AB ADR 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.