Correlation Between Woolworths Holdings and Konared

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

By analyzing existing cross correlation between Woolworths Holdings Ltd and Konared, you can compare the effects of market volatilities on Woolworths Holdings and Konared 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 Woolworths Holdings with a short position of Konared. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths Holdings and Konared.

Diversification Opportunities for Woolworths Holdings and Konared

0.0

Correlation Coefficient

Woolworths Holdings  Konared

Pay attention - limited upside

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

Pair Corralation between Woolworths Holdings and Konared

If you would invest  307.00  in Woolworths Holdings Ltd on February 28, 2024 and sell it today you would earn a total of  48.00  from holding Woolworths Holdings Ltd or generate 15.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Woolworths Holdings Ltd  vs.  Konared

Woolworths Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Woolworths Holdings Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, Woolworths Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Konared

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Konared has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Konared is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Woolworths Holdings and Konared

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

The idea behind Woolworths Holdings Ltd and Konared 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.