Correlation Between WE Source and Gravity

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

By analyzing existing cross correlation between WE Source Corp and Gravity Co, you can compare the effects of market volatilities on WE Source and Gravity 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 WE Source with a short position of Gravity. Check out your portfolio center. Please also check ongoing floating volatility patterns of WE Source and Gravity.

Diversification Opportunities for WE Source and Gravity

-0.66

Correlation Coefficient

WE Source  Gravity

Excellent diversification

The 3 months correlation between WESC and Gravity is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding WE Source Corp and Gravity Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gravity and WE Source 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 WE Source Corp are associated (or correlated) with Gravity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gravity has no effect on the direction of WE Source i.e., WE Source and Gravity go up and down completely randomly.

Pair Corralation between WE Source and Gravity

Given the investment horizon of 90 days WE Source Corp is expected to under-perform the Gravity. In addition to that, WE Source is 6.54 times more volatile than Gravity Co. It trades about -0.13 of its total potential returns per unit of risk. Gravity Co is currently generating about 0.02 per unit of volatility. If you would invest  6,067  in Gravity Co on May 3, 2025 and sell it today you would earn a total of  96.00  from holding Gravity Co or generate 1.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

WE Source Corp  vs.  Gravity Co

WE Source Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days WE Source Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Gravity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gravity Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Gravity is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WE Source and Gravity

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

The idea behind WE Source Corp and Gravity Co 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.