Correlation Between WuXi AppTec and Pinterest

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

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

Diversification Opportunities for WuXi AppTec and Pinterest

-0.41

Correlation Coefficient

WuXi AppTec  Pinterest

Very good diversification

The 3 months correlation between WuXi and Pinterest is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding WuXi AppTec Co and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest and WuXi AppTec 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 WuXi AppTec Co are associated (or correlated) with Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of WuXi AppTec i.e., WuXi AppTec and Pinterest go up and down completely randomly.

Pair Corralation between WuXi AppTec and Pinterest

Assuming the 90 days horizon WuXi AppTec Co is expected to generate 2.82 times more return on investment than Pinterest. However, WuXi AppTec is 2.82 times more volatile than Pinterest. It trades about 0.13 of its potential returns per unit of risk. Pinterest is currently generating about -0.05 per unit of risk. If you would invest  588.00  in WuXi AppTec Co on October 11, 2024 and sell it today you would earn a total of  81.00  from holding WuXi AppTec Co or generate 13.78% return on investment over 90 days.

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

WuXi AppTec Co  vs.  Pinterest

WuXi AppTec

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WuXi AppTec Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, WuXi AppTec reported solid returns over the last few months and may actually be approaching a breakup point.

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with WuXi AppTec and Pinterest

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

The idea behind WuXi AppTec Co and Pinterest 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..