Correlation Between WOOLWORTHS HDGS and WOOLWORTHS HLDGS

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

By analyzing existing cross correlation between WOOLWORTHS HDGS GDR and WOOLWORTHS HLDGS, you can compare the effects of market volatilities on WOOLWORTHS HDGS and WOOLWORTHS HLDGS 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 HDGS with a short position of WOOLWORTHS HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of WOOLWORTHS HDGS and WOOLWORTHS HLDGS.

Diversification Opportunities for WOOLWORTHS HDGS and WOOLWORTHS HLDGS

0.65

Correlation Coefficient

WOOLWORTHS HDGS  WOOLWORTHS HLDGS

Poor diversification

The 3 months correlation between WOOLWORTHS and WOOLWORTHS is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding WOOLWORTHS HDGS GDR and WOOLWORTHS HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOOLWORTHS HLDGS and WOOLWORTHS HDGS 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 HDGS GDR are associated (or correlated) with WOOLWORTHS HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOOLWORTHS HLDGS has no effect on the direction of WOOLWORTHS HDGS i.e., WOOLWORTHS HDGS and WOOLWORTHS HLDGS go up and down completely randomly.

Pair Corralation between WOOLWORTHS HDGS and WOOLWORTHS HLDGS

Assuming the 90 days trading horizon WOOLWORTHS HDGS GDR is expected to under-perform the WOOLWORTHS HLDGS. In addition to that, WOOLWORTHS HDGS is 1.11 times more volatile than WOOLWORTHS HLDGS. It trades about -0.06 of its total potential returns per unit of risk. WOOLWORTHS HLDGS is currently generating about -0.05 per unit of volatility. If you would invest  344.00  in WOOLWORTHS HLDGS on October 7, 2024 and sell it today you would lose (22.00) from holding WOOLWORTHS HLDGS or give up 6.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

WOOLWORTHS HDGS GDR  vs.  WOOLWORTHS HLDGS

WOOLWORTHS HDGS GDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WOOLWORTHS HDGS GDR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

WOOLWORTHS HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WOOLWORTHS HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, WOOLWORTHS HLDGS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WOOLWORTHS HDGS and WOOLWORTHS HLDGS

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

The idea behind WOOLWORTHS HDGS GDR and WOOLWORTHS HLDGS 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.