Correlation Between Water Ways and Austin Engineering

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

By analyzing existing cross correlation between Water Ways Technologies and Austin Engineering Limited, you can compare the effects of market volatilities on Water Ways and Austin Engineering 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 Water Ways with a short position of Austin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Water Ways and Austin Engineering.

Diversification Opportunities for Water Ways and Austin Engineering

0.43

Correlation Coefficient

Water Ways  Austin Engineering

Very weak diversification

The 3 months correlation between Water and Austin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Water Ways Technologies and Austin Engineering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austin Engineering and Water Ways 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 Water Ways Technologies are associated (or correlated) with Austin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austin Engineering has no effect on the direction of Water Ways i.e., Water Ways and Austin Engineering go up and down completely randomly.

Pair Corralation between Water Ways and Austin Engineering

Assuming the 90 days horizon Water Ways Technologies is expected to generate 5.42 times more return on investment than Austin Engineering. However, Water Ways is 5.42 times more volatile than Austin Engineering Limited. It trades about 0.12 of its potential returns per unit of risk. Austin Engineering Limited is currently generating about 0.05 per unit of risk. If you would invest  0.14  in Water Ways Technologies on May 5, 2025 and sell it today you would earn a total of  0.86  from holding Water Ways Technologies or generate 614.29% return on investment over 90 days.

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

Water Ways Technologies  vs.  Austin Engineering Limited

Water Ways Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Water Ways Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Water Ways reported solid returns over the last few months and may actually be approaching a breakup point.

Austin Engineering

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Austin Engineering Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Austin Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Water Ways and Austin Engineering

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

The idea behind Water Ways Technologies and Austin Engineering Limited 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.