Correlation Between Willy Food and Ratio Oil

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

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

Diversification Opportunities for Willy Food and Ratio Oil

0.06

Correlation Coefficient

Willy Food  Ratio Oil

Significant diversification

The 3 months correlation between Willy and Ratio is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Willy Food and Ratio Oil Explorations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratio Oil Explorations 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 Ratio Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratio Oil Explorations has no effect on the direction of Willy Food i.e., Willy Food and Ratio Oil go up and down completely randomly.

Pair Corralation between Willy Food and Ratio Oil

Assuming the 90 days trading horizon Willy Food is expected to under-perform the Ratio Oil. But the stock apears to be less risky and, when comparing its historical volatility, Willy Food is 1.14 times less risky than Ratio Oil. The stock trades about 0.0 of its potential returns per unit of risk. The Ratio Oil Explorations is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  32,509  in Ratio Oil Explorations on December 30, 2024 and sell it today you would earn a total of  5,291  from holding Ratio Oil Explorations or generate 16.28% return on investment over 90 days.

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

Willy Food  vs.  Ratio Oil Explorations

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.

Ratio Oil Explorations

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ratio Oil Explorations are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ratio Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Willy Food and Ratio Oil

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

The idea behind Willy Food and Ratio Oil Explorations 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.