Correlation Between Creades AB and Waystream Holding

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

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

Diversification Opportunities for Creades AB and Waystream Holding

-0.18

Correlation Coefficient

Creades AB  Waystream Holding

Good diversification

The 3 months correlation between Creades and Waystream is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Creades AB and Waystream Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waystream Holding and Creades AB 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 Creades AB are associated (or correlated) with Waystream Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waystream Holding has no effect on the direction of Creades AB i.e., Creades AB and Waystream Holding go up and down completely randomly.

Pair Corralation between Creades AB and Waystream Holding

Assuming the 90 days trading horizon Creades AB is expected to generate 1.17 times more return on investment than Waystream Holding. However, Creades AB is 1.17 times more volatile than Waystream Holding AB. It trades about 0.04 of its potential returns per unit of risk. Waystream Holding AB is currently generating about -0.22 per unit of risk. If you would invest  7,043  in Creades AB on February 4, 2024 and sell it today you would earn a total of  102.00  from holding Creades AB or generate 1.45% return on investment over 90 days.

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

Creades AB  vs.  Waystream Holding AB

Creades AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Creades AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Creades AB may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Waystream Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Waystream Holding AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Waystream Holding may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Creades AB and Waystream Holding

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

The idea behind Creades AB and Waystream Holding AB 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.