Correlation Between CPR Gomu and Wyncoast Industrial

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

By analyzing existing cross correlation between CPR Gomu Industrial and Wyncoast Industrial Park, you can compare the effects of market volatilities on CPR Gomu and Wyncoast Industrial 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 CPR Gomu with a short position of Wyncoast Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPR Gomu and Wyncoast Industrial.

Diversification Opportunities for CPR Gomu and Wyncoast Industrial

0.75

Correlation Coefficient

CPR Gomu  Wyncoast Industrial

Poor diversification

The 3 months correlation between CPR and Wyncoast is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CPR Gomu Industrial and Wyncoast Industrial Park in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wyncoast Industrial Park and CPR Gomu 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 CPR Gomu Industrial are associated (or correlated) with Wyncoast Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wyncoast Industrial Park has no effect on the direction of CPR Gomu i.e., CPR Gomu and Wyncoast Industrial go up and down completely randomly.

Pair Corralation between CPR Gomu and Wyncoast Industrial

Assuming the 90 days trading horizon CPR Gomu is expected to generate 157.87 times less return on investment than Wyncoast Industrial. But when comparing it to its historical volatility, CPR Gomu Industrial is 5.8 times less risky than Wyncoast Industrial. It trades about 0.01 of its potential returns per unit of risk. Wyncoast Industrial Park is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  49.00  in Wyncoast Industrial Park on April 12, 2024 and sell it today you would earn a total of  15.00  from holding Wyncoast Industrial Park or generate 30.61% return on investment over 90 days.

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

CPR Gomu Industrial  vs.  Wyncoast Industrial Park

CPR Gomu Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPR Gomu Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CPR Gomu is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Wyncoast Industrial Park

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wyncoast Industrial Park are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Wyncoast Industrial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CPR Gomu and Wyncoast Industrial

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

The idea behind CPR Gomu Industrial and Wyncoast Industrial Park 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.