Correlation Between WT Offshore and Indiva

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

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

Diversification Opportunities for WT Offshore and Indiva

0.0

Correlation Coefficient

WT Offshore  Indiva

Pay attention - limited upside

The 3 months correlation between WTI and Indiva is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WT Offshore and Indiva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indiva and WT Offshore 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 WT Offshore are associated (or correlated) with Indiva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indiva has no effect on the direction of WT Offshore i.e., WT Offshore and Indiva go up and down completely randomly.

Pair Corralation between WT Offshore and Indiva

Considering the 90-day investment horizon WT Offshore is expected to under-perform the Indiva. But the stock apears to be less risky and, when comparing its historical volatility, WT Offshore is 2.53 times less risky than Indiva. The stock trades about -0.06 of its potential returns per unit of risk. The Indiva is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6.80  in Indiva on October 26, 2024 and sell it today you would lose (4.70) from holding Indiva or give up 69.12% of portfolio value over 90 days.

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

WT Offshore  vs.  Indiva

WT Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WT Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Indiva

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indiva has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Indiva is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with WT Offshore and Indiva

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

The idea behind WT Offshore and Indiva 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.