Correlation Between Wolters Kluwer and Cirmaker Technology

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

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

Diversification Opportunities for Wolters Kluwer and Cirmaker Technology

0.12

Correlation Coefficient

Wolters Kluwer  Cirmaker Technology

Average diversification

The 3 months correlation between Wolters and Cirmaker is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Wolters Kluwer NV and Cirmaker Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirmaker Technology and Wolters Kluwer 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 Wolters Kluwer NV are associated (or correlated) with Cirmaker Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirmaker Technology has no effect on the direction of Wolters Kluwer i.e., Wolters Kluwer and Cirmaker Technology go up and down completely randomly.

Pair Corralation between Wolters Kluwer and Cirmaker Technology

Assuming the 90 days horizon Wolters Kluwer is expected to generate 254.2 times less return on investment than Cirmaker Technology. But when comparing it to its historical volatility, Wolters Kluwer NV is 70.5 times less risky than Cirmaker Technology. It trades about 0.02 of its potential returns per unit of risk. Cirmaker Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Cirmaker Technology on September 30, 2024 and sell it today you would earn a total of  5.39  from holding Cirmaker Technology or generate 53900.0% return on investment over 90 days.

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

Wolters Kluwer NV  vs.  Cirmaker Technology

Wolters Kluwer NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wolters Kluwer NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Wolters Kluwer is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Cirmaker Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cirmaker Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, Cirmaker Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wolters Kluwer and Cirmaker Technology

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

The idea behind Wolters Kluwer NV and Cirmaker Technology 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.