Correlation Between WiseTech Global and Hansen Technologies

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

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

Diversification Opportunities for WiseTech Global and Hansen Technologies

0.16

Correlation Coefficient

WiseTech Global  Hansen Technologies

Average diversification

The 3 months correlation between WiseTech and Hansen is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding WiseTech Global Limited and Hansen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansen Technologies and WiseTech Global 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 WiseTech Global Limited are associated (or correlated) with Hansen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansen Technologies has no effect on the direction of WiseTech Global i.e., WiseTech Global and Hansen Technologies go up and down completely randomly.

Pair Corralation between WiseTech Global and Hansen Technologies

Assuming the 90 days trading horizon WiseTech Global Limited is expected to generate 1.51 times more return on investment than Hansen Technologies. However, WiseTech Global is 1.51 times more volatile than Hansen Technologies. It trades about 0.08 of its potential returns per unit of risk. Hansen Technologies is currently generating about 0.02 per unit of risk. If you would invest  5,379  in WiseTech Global Limited on October 7, 2024 and sell it today you would earn a total of  7,079  from holding WiseTech Global Limited or generate 131.6% return on investment over 90 days.

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

WiseTech Global Limited  vs.  Hansen Technologies

WiseTech Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hansen Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hansen Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hansen Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WiseTech Global and Hansen Technologies

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

The idea behind WiseTech Global Limited and Hansen Technologies 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 Global Correlations module to find global opportunities by holding instruments from different markets.