Correlation Between Wang Lee and East Africa

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

Diversification Opportunities for Wang Lee and East Africa

0.0

Correlation Coefficient

Wang Lee  East Africa

Pay attention - limited upside

The 3 months correlation between Wang and East is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wang Lee Group, and East Africa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Africa Metals 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 East Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Africa Metals has no effect on the direction of Wang Lee i.e., Wang Lee and East Africa go up and down completely randomly.

Pair Corralation between Wang Lee and East Africa

Given the investment horizon of 90 days Wang Lee Group, is expected to generate 0.75 times more return on investment than East Africa. However, Wang Lee Group, is 1.33 times less risky than East Africa. It trades about 0.13 of its potential returns per unit of risk. East Africa Metals is currently generating about 0.06 per unit of risk. If you would invest  69.00  in Wang Lee Group, on December 4, 2024 and sell it today you would earn a total of  532.00  from holding Wang Lee Group, or generate 771.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.0%
Values	Daily Returns

Wang Lee Group,  vs.  East Africa Metals

Wang Lee Group,

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wang Lee Group, are ranked lower than 10 (%) 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.

East Africa Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days East Africa Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, East Africa is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wang Lee and East Africa

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

The idea behind Wang Lee Group, and East Africa Metals 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.