Correlation Between WNS Holdings and Wipro Limited

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

By analyzing existing cross correlation between WNS Holdings and Wipro Limited ADR, you can compare the effects of market volatilities on WNS Holdings and Wipro Limited 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 WNS Holdings with a short position of Wipro Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of WNS Holdings and Wipro Limited.

Diversification Opportunities for WNS Holdings and Wipro Limited

0.07

Correlation Coefficient

WNS Holdings  Wipro Limited

Significant diversification

The 3 months correlation between WNS and Wipro is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding WNS Holdings and Wipro Limited ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wipro Limited ADR and WNS 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 WNS Holdings are associated (or correlated) with Wipro Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wipro Limited ADR has no effect on the direction of WNS Holdings i.e., WNS Holdings and Wipro Limited go up and down completely randomly.

Pair Corralation between WNS Holdings and Wipro Limited

Considering the 90-day investment horizon WNS Holdings is expected to under-perform the Wipro Limited. In addition to that, WNS Holdings is 1.46 times more volatile than Wipro Limited ADR. It trades about -0.24 of its total potential returns per unit of risk. Wipro Limited ADR is currently generating about -0.11 per unit of volatility. If you would invest  362.00  in Wipro Limited ADR on October 11, 2024 and sell it today you would lose (11.00) from holding Wipro Limited ADR or give up 3.04% of portfolio value over 90 days.

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

WNS Holdings  vs.  Wipro Limited ADR

WNS Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WNS Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, WNS Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Wipro Limited ADR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wipro Limited ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward indicators, Wipro Limited may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with WNS Holdings and Wipro Limited

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

The idea behind WNS Holdings and Wipro Limited ADR 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.