Correlation Between WuXi Biologics and Atkore International

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

By analyzing existing cross correlation between WuXi Biologics and Atkore International Group, you can compare the effects of market volatilities on WuXi Biologics and Atkore International 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 WuXi Biologics with a short position of Atkore International. Check out your portfolio center. Please also check ongoing floating volatility patterns of WuXi Biologics and Atkore International.

Diversification Opportunities for WuXi Biologics and Atkore International

-0.57

Correlation Coefficient

WuXi Biologics  Atkore International

Excellent diversification

The 3 months correlation between WuXi and Atkore is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding WuXi Biologics and Atkore International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atkore International and WuXi Biologics 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 WuXi Biologics are associated (or correlated) with Atkore International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atkore International has no effect on the direction of WuXi Biologics i.e., WuXi Biologics and Atkore International go up and down completely randomly.

Pair Corralation between WuXi Biologics and Atkore International

Assuming the 90 days horizon WuXi Biologics is expected to under-perform the Atkore International. In addition to that, WuXi Biologics is 1.6 times more volatile than Atkore International Group. It trades about -0.04 of its total potential returns per unit of risk. Atkore International Group is currently generating about 0.05 per unit of volatility. If you would invest  11,323  in Atkore International Group on January 25, 2024 and sell it today you would earn a total of  6,675  from holding Atkore International Group or generate 58.95% return on investment over 90 days.

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

WuXi Biologics  vs.  Atkore International Group

WuXi Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WuXi Biologics 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 fundamental drivers 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.

Atkore International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atkore International Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking signals, Atkore International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WuXi Biologics and Atkore International

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

The idea behind WuXi Biologics and Atkore International Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.