Correlation Between Wex and Central Proteina
Can any of the company-specific risk be diversified away by investing in both Wex and Central Proteina 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 Wex and Central Proteina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wex Inc and Central Proteina Prima, you can compare the effects of market volatilities on Wex and Central Proteina 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 Wex with a short position of Central Proteina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wex and Central Proteina.
Diversification Opportunities for Wex and Central Proteina
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wex and Central is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Wex Inc and Central Proteina Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Proteina Prima and Wex 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 Wex Inc are associated (or correlated) with Central Proteina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Proteina Prima has no effect on the direction of Wex i.e., Wex and Central Proteina go up and down completely randomly.
Pair Corralation between Wex and Central Proteina
Considering the 90-day investment horizon Wex Inc is expected to generate 0.59 times more return on investment than Central Proteina. However, Wex Inc is 1.68 times less risky than Central Proteina. It trades about -0.06 of its potential returns per unit of risk. Central Proteina Prima is currently generating about -0.22 per unit of risk. If you would invest 23,641 in Wex Inc on January 26, 2024 and sell it today you would lose (310.00) from holding Wex Inc or give up 1.31% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 72.73% |
Values | Daily Returns |
Wex Inc vs. Central Proteina Prima
Performance |
Timeline |
Wex Inc |
Central Proteina Prima |
Wex and Central Proteina Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wex and Central Proteina
The main advantage of trading using opposite Wex and Central Proteina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wex position performs unexpectedly, Central Proteina 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 Central Proteina will offset losses from the drop in Central Proteina's long position.The idea behind Wex Inc and Central Proteina Prima 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.Central Proteina vs. Vale Indonesia Tbk | Central Proteina vs. Timah Persero Tbk | Central Proteina vs. United Tractors Tbk | Central Proteina vs. Semen Indonesia Persero |
Check out your portfolio center.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.
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