Correlation Between Willy Food and Brack Capit

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

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

Diversification Opportunities for Willy Food and Brack Capit

-0.69

Correlation Coefficient

Willy Food  Brack Capit

Excellent diversification

The 3 months correlation between Willy and Brack is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Willy Food and Brack Capit N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brack Capit N and Willy Food 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 Willy Food are associated (or correlated) with Brack Capit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brack Capit N has no effect on the direction of Willy Food i.e., Willy Food and Brack Capit go up and down completely randomly.

Pair Corralation between Willy Food and Brack Capit

Assuming the 90 days trading horizon Willy Food is expected to under-perform the Brack Capit. But the stock apears to be less risky and, when comparing its historical volatility, Willy Food is 4.04 times less risky than Brack Capit. The stock trades about -0.06 of its potential returns per unit of risk. The Brack Capit N is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,715,000  in Brack Capit N on December 21, 2024 and sell it today you would lose (372,000) from holding Brack Capit N or give up 13.7% of portfolio value over 90 days.

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

Willy Food  vs.  Brack Capit N

Willy Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Willy Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Willy Food is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brack Capit N

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brack Capit N has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Brack Capit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Willy Food and Brack Capit

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

The idea behind Willy Food and Brack Capit N 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.