Correlation Between Worley and CWC Energy

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

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

Diversification Opportunities for Worley and CWC Energy

0.83

Correlation Coefficient

Worley  CWC Energy

Very poor diversification

The 3 months correlation between Worley and CWC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Worley Limited and CWC Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CWC Energy Services and Worley 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 Worley Limited are associated (or correlated) with CWC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CWC Energy Services has no effect on the direction of Worley i.e., Worley and CWC Energy go up and down completely randomly.

Pair Corralation between Worley and CWC Energy

If you would invest  893.00  in Worley Limited on September 25, 2024 and sell it today you would lose (6.00) from holding Worley Limited or give up 0.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

Worley Limited  vs.  CWC Energy Services

Worley Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worley Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CWC Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Worley and CWC Energy

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

The idea behind Worley Limited and CWC Energy Services 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .