Correlation Between Wirecard and WH Group

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

By analyzing existing cross correlation between Wirecard AG and WH Group Limited, you can compare the effects of market volatilities on Wirecard and WH Group 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 WH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wirecard and WH Group.

Diversification Opportunities for Wirecard and WH Group

0.29

Correlation Coefficient

Wirecard  WH Group

Modest diversification

The 3 months correlation between Wirecard and WHGRF is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Wirecard AG and WH Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WH Group Limited 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 WH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WH Group Limited has no effect on the direction of Wirecard i.e., Wirecard and WH Group go up and down completely randomly.

Pair Corralation between Wirecard and WH Group

Assuming the 90 days horizon Wirecard AG is expected to generate 30.26 times more return on investment than WH Group. However, Wirecard is 30.26 times more volatile than WH Group Limited. It trades about 0.14 of its potential returns per unit of risk. WH Group Limited is currently generating about 0.12 per unit of risk. If you would invest  0.01  in Wirecard AG on October 4, 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 Together
Strength	Very Weak
Accuracy	58.43%
Values	Daily Returns

Wirecard AG  vs.  WH Group Limited

Wirecard AG

Risk-Adjusted Performance

8 of 100

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 abnormal fundamental indicators, Wirecard reported solid returns over the last few months and may actually be approaching a breakup point.

WH Group Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WH Group Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, WH Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wirecard and WH Group

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

The idea behind Wirecard AG and WH Group Limited 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.