Correlation Between Woolworths Holdings and Ryohin Keikaku

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

By analyzing existing cross correlation between Woolworths Holdings Ltd and Ryohin Keikaku Co, you can compare the effects of market volatilities on Woolworths Holdings and Ryohin Keikaku 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 Woolworths Holdings with a short position of Ryohin Keikaku. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths Holdings and Ryohin Keikaku.

Diversification Opportunities for Woolworths Holdings and Ryohin Keikaku

-0.27

Correlation Coefficient

Woolworths Holdings  Ryohin Keikaku

Very good diversification

The 3 months correlation between Woolworths and Ryohin is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths Holdings Ltd and Ryohin Keikaku Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryohin Keikaku and Woolworths Holdings 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 Woolworths Holdings Ltd are associated (or correlated) with Ryohin Keikaku. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryohin Keikaku has no effect on the direction of Woolworths Holdings i.e., Woolworths Holdings and Ryohin Keikaku go up and down completely randomly.

Pair Corralation between Woolworths Holdings and Ryohin Keikaku

Assuming the 90 days horizon Woolworths Holdings Ltd is expected to under-perform the Ryohin Keikaku. In addition to that, Woolworths Holdings is 1.1 times more volatile than Ryohin Keikaku Co. It trades about 0.0 of its total potential returns per unit of risk. Ryohin Keikaku Co is currently generating about 0.07 per unit of volatility. If you would invest  1,062  in Ryohin Keikaku Co on October 25, 2024 and sell it today you would earn a total of  1,603  from holding Ryohin Keikaku Co or generate 150.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.99%
Values	Daily Returns

Woolworths Holdings Ltd  vs.  Ryohin Keikaku Co

Woolworths Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Woolworths Holdings Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ryohin Keikaku

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ryohin Keikaku Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking signals, Ryohin Keikaku showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Woolworths Holdings and Ryohin Keikaku

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

The idea behind Woolworths Holdings Ltd and Ryohin Keikaku Co 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.