Correlation Between WiseTech Global and Kinaxis

Can any of the company-specific risk be diversified away by investing in both WiseTech Global and Kinaxis 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 Kinaxis 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 Kinaxis, you can compare the effects of market volatilities on WiseTech Global and Kinaxis 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 Kinaxis. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseTech Global and Kinaxis.

Diversification Opportunities for WiseTech Global and Kinaxis

0.53

Correlation Coefficient

WiseTech Global  Kinaxis

Very weak diversification

The 3 months correlation between WiseTech and Kinaxis is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding WiseTech Global Limited and Kinaxis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinaxis 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 Kinaxis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinaxis has no effect on the direction of WiseTech Global i.e., WiseTech Global and Kinaxis go up and down completely randomly.

Pair Corralation between WiseTech Global and Kinaxis

Assuming the 90 days horizon WiseTech Global Limited is expected to generate 1.44 times more return on investment than Kinaxis. However, WiseTech Global is 1.44 times more volatile than Kinaxis. It trades about 0.08 of its potential returns per unit of risk. Kinaxis is currently generating about 0.08 per unit of risk. If you would invest  6,841  in WiseTech Global Limited on October 24, 2024 and sell it today you would earn a total of  759.00  from holding WiseTech Global Limited or generate 11.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

WiseTech Global Limited  vs.  Kinaxis

WiseTech Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WiseTech Global Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, WiseTech Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Kinaxis

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinaxis are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Kinaxis may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with WiseTech Global and Kinaxis

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

The idea behind WiseTech Global Limited and Kinaxis 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.