Correlation Between Wang Lee and Dycom Industries

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

Diversification Opportunities for Wang Lee and Dycom Industries

0.32

Correlation Coefficient

Wang Lee  Dycom Industries

Weak diversification

The 3 months correlation between Wang and Dycom is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Wang Lee Group, and Dycom Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dycom Industries 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 Dycom Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dycom Industries has no effect on the direction of Wang Lee i.e., Wang Lee and Dycom Industries go up and down completely randomly.

Pair Corralation between Wang Lee and Dycom Industries

Given the investment horizon of 90 days Wang Lee Group, is expected to generate 6.55 times more return on investment than Dycom Industries. However, Wang Lee is 6.55 times more volatile than Dycom Industries. It trades about 0.02 of its potential returns per unit of risk. Dycom Industries is currently generating about -0.05 per unit of risk. If you would invest  186.00  in Wang Lee Group, on December 27, 2024 and sell it today you would lose (143.00) from holding Wang Lee Group, or give up 76.88% of portfolio value over 90 days.

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

Wang Lee Group,  vs.  Dycom Industries

Wang Lee Group,

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wang Lee Group, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Wang Lee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dycom Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dycom Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Wang Lee and Dycom Industries

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

The idea behind Wang Lee Group, and Dycom Industries 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.