Correlation Between Wang Lee and Arcosa

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

By analyzing existing cross correlation between Wang Lee Group, and Arcosa Inc, you can compare the effects of market volatilities on Wang Lee and Arcosa 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 Wang Lee with a short position of Arcosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wang Lee and Arcosa.

Diversification Opportunities for Wang Lee and Arcosa

0.89

Correlation Coefficient

Wang Lee  Arcosa

Very poor diversification

The 3 months correlation between Wang and Arcosa is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Wang Lee Group, and Arcosa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcosa Inc and Wang Lee 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 Wang Lee Group, are associated (or correlated) with Arcosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcosa Inc has no effect on the direction of Wang Lee i.e., Wang Lee and Arcosa go up and down completely randomly.

Pair Corralation between Wang Lee and Arcosa

Given the investment horizon of 90 days Wang Lee Group, is expected to generate 6.75 times more return on investment than Arcosa. However, Wang Lee is 6.75 times more volatile than Arcosa Inc. It trades about 0.32 of its potential returns per unit of risk. Arcosa Inc is currently generating about 0.14 per unit of risk. If you would invest  58.00  in Wang Lee Group, on August 30, 2024 and sell it today you would earn a total of  409.00  from holding Wang Lee Group, or generate 705.17% return on investment over 90 days.

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

Wang Lee Group,  vs.  Arcosa Inc

Wang Lee Group,

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wang Lee Group, are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Wang Lee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Arcosa Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arcosa Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Arcosa sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wang Lee and Arcosa

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

The idea behind Wang Lee Group, and Arcosa Inc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.