Correlation Between Leading Brands and World Point

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Can any of the company-specific risk be diversified away by investing in both Leading Brands and World Point 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 Leading Brands and World Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leading Brands and World Point Terminals, you can compare the effects of market volatilities on Leading Brands and World Point 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 Leading Brands with a short position of World Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Brands and World Point.

Diversification Opportunities for Leading Brands and World Point

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Leading and World is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Leading Brands and World Point Terminals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Point Terminals and Leading Brands 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 Leading Brands are associated (or correlated) with World Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Point Terminals has no effect on the direction of Leading Brands i.e., Leading Brands and World Point go up and down completely randomly.

Pair Corralation between Leading Brands and World Point

If you would invest (100.00) in World Point Terminals on December 29, 2023 and sell it today you would earn a total of  100.00  from holding World Point Terminals or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Leading Brands  vs.  World Point Terminals

 Performance 
       Timeline  
Leading Brands 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Leading Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Leading Brands is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
World Point Terminals 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days World Point Terminals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, World Point is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Leading Brands and World Point Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Leading Brands and World Point

The main advantage of trading using opposite Leading Brands and World Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Brands position performs unexpectedly, World Point 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 World Point will offset losses from the drop in World Point's long position.
The idea behind Leading Brands and World Point Terminals 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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