Correlation Between WeRide American and Compass

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

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

Diversification Opportunities for WeRide American and Compass

-0.68

Correlation Coefficient

WeRide American  Compass

Excellent diversification

The 3 months correlation between WeRide and Compass is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding WeRide American Depositary and Compass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass and WeRide American 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 WeRide American Depositary are associated (or correlated) with Compass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass has no effect on the direction of WeRide American i.e., WeRide American and Compass go up and down completely randomly.

Pair Corralation between WeRide American and Compass

Considering the 90-day investment horizon WeRide American Depositary is expected to under-perform the Compass. In addition to that, WeRide American is 1.48 times more volatile than Compass. It trades about -0.03 of its total potential returns per unit of risk. Compass is currently generating about 0.07 per unit of volatility. If you would invest  936.00  in Compass on August 26, 2025 and sell it today you would earn a total of  124.00  from holding Compass or generate 13.25% return on investment over 90 days.

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

WeRide American Depositary  vs.  Compass

WeRide American Depo

Risk-Adjusted Performance

Weakest

Over the last 90 days WeRide American Depositary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Compass

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Compass are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, Compass reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WeRide American and Compass

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

The idea behind WeRide American Depositary and Compass 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.