Correlation Between Westshore Terminals and Fredonia Mining

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

By analyzing existing cross correlation between Westshore Terminals Investment and Fredonia Mining, you can compare the effects of market volatilities on Westshore Terminals and Fredonia Mining 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 Westshore Terminals with a short position of Fredonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westshore Terminals and Fredonia Mining.

Diversification Opportunities for Westshore Terminals and Fredonia Mining

-0.69

Correlation Coefficient

Westshore Terminals  Fredonia Mining

Excellent diversification

The 3 months correlation between Westshore and Fredonia is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Westshore Terminals Investment and Fredonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fredonia Mining and Westshore Terminals 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 Westshore Terminals Investment are associated (or correlated) with Fredonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fredonia Mining has no effect on the direction of Westshore Terminals i.e., Westshore Terminals and Fredonia Mining go up and down completely randomly.

Pair Corralation between Westshore Terminals and Fredonia Mining

Assuming the 90 days trading horizon Westshore Terminals Investment is expected to generate 0.24 times more return on investment than Fredonia Mining. However, Westshore Terminals Investment is 4.12 times less risky than Fredonia Mining. It trades about 0.11 of its potential returns per unit of risk. Fredonia Mining is currently generating about -0.05 per unit of risk. If you would invest  2,269  in Westshore Terminals Investment on December 24, 2024 and sell it today you would earn a total of  258.00  from holding Westshore Terminals Investment or generate 11.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Westshore Terminals Investment  vs.  Fredonia Mining

Westshore Terminals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Westshore Terminals Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Westshore Terminals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fredonia Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fredonia Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Westshore Terminals and Fredonia Mining

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

The idea behind Westshore Terminals Investment and Fredonia Mining 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..