Correlation Between Willy Food and Batm Advanced

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

By analyzing existing cross correlation between Willy Food and Batm Advanced Communications, you can compare the effects of market volatilities on Willy Food and Batm Advanced 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 Batm Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willy Food and Batm Advanced.

Diversification Opportunities for Willy Food and Batm Advanced

-0.71

Correlation Coefficient

Willy Food  Batm Advanced

Pay attention - limited upside

The 3 months correlation between Willy and Batm is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Willy Food and Batm Advanced Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batm Advanced Commun 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 Batm Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batm Advanced Commun has no effect on the direction of Willy Food i.e., Willy Food and Batm Advanced go up and down completely randomly.

Pair Corralation between Willy Food and Batm Advanced

Assuming the 90 days trading horizon Willy Food is expected to generate 1.49 times more return on investment than Batm Advanced. However, Willy Food is 1.49 times more volatile than Batm Advanced Communications. It trades about 0.01 of its potential returns per unit of risk. Batm Advanced Communications is currently generating about -0.09 per unit of risk. If you would invest  284,500  in Willy Food on October 26, 2024 and sell it today you would lose (300.00) from holding Willy Food or give up 0.11% 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.  Batm Advanced Communications

Willy Food

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Willy Food are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Willy Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Batm Advanced Commun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Batm Advanced Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Batm Advanced 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 Batm Advanced

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

The idea behind Willy Food and Batm Advanced Communications 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.