Correlation Between WM Technology and Probe Metals

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

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

Diversification Opportunities for WM Technology and Probe Metals

-0.27

Correlation Coefficient

WM Technology  Probe Metals

Very good diversification

The 3 months correlation between MAPSW and Probe is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding WM Technology and Probe Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Probe Metals and WM Technology 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 WM Technology are associated (or correlated) with Probe Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Probe Metals has no effect on the direction of WM Technology i.e., WM Technology and Probe Metals go up and down completely randomly.

Pair Corralation between WM Technology and Probe Metals

Assuming the 90 days horizon WM Technology is expected to generate 6.63 times more return on investment than Probe Metals. However, WM Technology is 6.63 times more volatile than Probe Metals. It trades about 0.08 of its potential returns per unit of risk. Probe Metals is currently generating about 0.03 per unit of risk. If you would invest  1.93  in WM Technology on May 3, 2025 and sell it today you would lose (0.23) from holding WM Technology or give up 11.92% of portfolio value over 90 days.

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

WM Technology  vs.  Probe Metals

WM Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WM Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, WM Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Probe Metals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Probe Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Probe Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with WM Technology and Probe Metals

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

The idea behind WM Technology and Probe Metals 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.