Correlation Between Wang Lee and Aecom Technology

Can any of the company-specific risk be diversified away by investing in both Wang Lee and Aecom Technology 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 Aecom Technology 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 Aecom Technology, you can compare the effects of market volatilities on Wang Lee and Aecom Technology 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 Aecom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wang Lee and Aecom Technology.

Diversification Opportunities for Wang Lee and Aecom Technology

0.9

Correlation Coefficient

Wang Lee  Aecom Technology

Almost no diversification

The 3 months correlation between Wang and Aecom is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Wang Lee Group, and Aecom Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecom Technology 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 Aecom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecom Technology has no effect on the direction of Wang Lee i.e., Wang Lee and Aecom Technology go up and down completely randomly.

Pair Corralation between Wang Lee and Aecom Technology

Given the investment horizon of 90 days Wang Lee Group, is expected to generate 8.87 times more return on investment than Aecom Technology. However, Wang Lee is 8.87 times more volatile than Aecom Technology. It trades about 0.32 of its potential returns per unit of risk. Aecom Technology is currently generating about 0.18 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	Very Strong
Accuracy	100.0%
Values	Daily Returns

Wang Lee Group,  vs.  Aecom Technology

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.

Aecom Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aecom Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Aecom Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wang Lee and Aecom Technology

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

The idea behind Wang Lee Group, and Aecom Technology 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.