Correlation Between United States and WuXi AppTec

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

By analyzing existing cross correlation between United States Copper and WuXi AppTec Co, you can compare the effects of market volatilities on United States and WuXi AppTec 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 United States with a short position of WuXi AppTec. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and WuXi AppTec.

Diversification Opportunities for United States and WuXi AppTec

-0.63

Correlation Coefficient

United States  WuXi AppTec

Excellent diversification

The 3 months correlation between United and WuXi is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding United States Copper and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec and United States 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 United States Copper are associated (or correlated) with WuXi AppTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi AppTec has no effect on the direction of United States i.e., United States and WuXi AppTec go up and down completely randomly.

Pair Corralation between United States and WuXi AppTec

Given the investment horizon of 90 days United States Copper is expected to generate 0.16 times more return on investment than WuXi AppTec. However, United States Copper is 6.37 times less risky than WuXi AppTec. It trades about 0.23 of its potential returns per unit of risk. WuXi AppTec Co is currently generating about -0.17 per unit of risk. If you would invest  2,410  in United States Copper on January 24, 2024 and sell it today you would earn a total of  401.00  from holding United States Copper or generate 16.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

United States Copper  vs.  WuXi AppTec Co

United States Copper

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United States Copper are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, United States reported solid returns over the last few months and may actually be approaching a breakup point.

WuXi AppTec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WuXi AppTec Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with United States and WuXi AppTec

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

The idea behind United States Copper and WuXi AppTec 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..