Correlation Between Wt Financial and Bisalloy Steel

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

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

Diversification Opportunities for Wt Financial and Bisalloy Steel

-0.43

Correlation Coefficient

Wt Financial  Bisalloy Steel

Very good diversification

The 3 months correlation between WTL and Bisalloy is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wt Financial Group and Bisalloy Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisalloy Steel Group and Wt Financial 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 Financial Group are associated (or correlated) with Bisalloy Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisalloy Steel Group has no effect on the direction of Wt Financial i.e., Wt Financial and Bisalloy Steel go up and down completely randomly.

Pair Corralation between Wt Financial and Bisalloy Steel

Assuming the 90 days trading horizon Wt Financial Group is expected to generate 0.9 times more return on investment than Bisalloy Steel. However, Wt Financial Group is 1.11 times less risky than Bisalloy Steel. It trades about 0.11 of its potential returns per unit of risk. Bisalloy Steel Group is currently generating about -0.08 per unit of risk. If you would invest  8.90  in Wt Financial Group on October 6, 2024 and sell it today you would earn a total of  0.50  from holding Wt Financial Group or generate 5.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Wt Financial Group  vs.  Bisalloy Steel Group

Wt Financial Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wt Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Wt Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bisalloy Steel Group

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bisalloy Steel Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bisalloy Steel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wt Financial and Bisalloy Steel

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

The idea behind Wt Financial Group and Bisalloy Steel Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.