Correlation Between Wex and Kokoh Inti

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Can any of the company-specific risk be diversified away by investing in both Wex and Kokoh Inti 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 Kokoh Inti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wex Inc and Kokoh Inti Arebama, you can compare the effects of market volatilities on Wex and Kokoh Inti 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 Kokoh Inti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wex and Kokoh Inti.

Diversification Opportunities for Wex and Kokoh Inti

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Wex and Kokoh is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Wex Inc and Kokoh Inti Arebama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kokoh Inti Arebama 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 Kokoh Inti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kokoh Inti Arebama has no effect on the direction of Wex i.e., Wex and Kokoh Inti go up and down completely randomly.

Pair Corralation between Wex and Kokoh Inti

Considering the 90-day investment horizon Wex Inc is expected to generate 0.24 times more return on investment than Kokoh Inti. However, Wex Inc is 4.11 times less risky than Kokoh Inti. It trades about 0.38 of its potential returns per unit of risk. Kokoh Inti Arebama is currently generating about -0.03 per unit of risk. If you would invest  22,043  in Wex Inc on December 29, 2023 and sell it today you would earn a total of  1,345  from holding Wex Inc or generate 6.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Wex Inc  vs.  Kokoh Inti Arebama

 Performance 
       Timeline  
Wex Inc 

Risk-Adjusted Performance

20 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Wex Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Wex showed solid returns over the last few months and may actually be approaching a breakup point.
Kokoh Inti Arebama 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Kokoh Inti Arebama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Wex and Kokoh Inti Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wex and Kokoh Inti

The main advantage of trading using opposite Wex and Kokoh Inti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wex position performs unexpectedly, Kokoh Inti 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 Kokoh Inti will offset losses from the drop in Kokoh Inti's long position.
The idea behind Wex Inc and Kokoh Inti Arebama 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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