Correlation Between Wirecard and BASE

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

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

Diversification Opportunities for Wirecard and BASE

-0.03

Correlation Coefficient

Wirecard  BASE

Good diversification

The 3 months correlation between Wirecard and BASE is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Wirecard AG and BASE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASE Inc and Wirecard 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 Wirecard AG are associated (or correlated) with BASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASE Inc has no effect on the direction of Wirecard i.e., Wirecard and BASE go up and down completely randomly.

Pair Corralation between Wirecard and BASE

Assuming the 90 days horizon Wirecard AG is expected to generate 34.68 times more return on investment than BASE. However, Wirecard is 34.68 times more volatile than BASE Inc. It trades about 0.12 of its potential returns per unit of risk. BASE Inc is currently generating about 0.03 per unit of risk. If you would invest  0.01  in Wirecard AG on December 8, 2024 and sell it today you would earn a total of  0.99  from holding Wirecard AG or generate 9900.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Wirecard AG  vs.  BASE Inc

Wirecard AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wirecard AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Wirecard reported solid returns over the last few months and may actually be approaching a breakup point.

BASE Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BASE Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BASE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wirecard and BASE

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

The idea behind Wirecard AG and BASE Inc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.