Correlation Between Willis Towers and KOWORLD AG

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

By analyzing existing cross correlation between Willis Towers Watson and KOWORLD AG, you can compare the effects of market volatilities on Willis Towers and KOWORLD AG 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 Willis Towers with a short position of KOWORLD AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Towers and KOWORLD AG.

Diversification Opportunities for Willis Towers and KOWORLD AG

-0.38

Correlation Coefficient

Willis Towers  KOWORLD AG

Very good diversification

The 3 months correlation between Willis and KOWORLD is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Willis Towers Watson and KOWORLD AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOWORLD AG and Willis Towers 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 Willis Towers Watson are associated (or correlated) with KOWORLD AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOWORLD AG has no effect on the direction of Willis Towers i.e., Willis Towers and KOWORLD AG go up and down completely randomly.

Pair Corralation between Willis Towers and KOWORLD AG

Assuming the 90 days horizon Willis Towers Watson is expected to under-perform the KOWORLD AG. But the stock apears to be less risky and, when comparing its historical volatility, Willis Towers Watson is 1.26 times less risky than KOWORLD AG. The stock trades about -0.04 of its potential returns per unit of risk. The KOWORLD AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,624  in KOWORLD AG on April 22, 2025 and sell it today you would earn a total of  406.00  from holding KOWORLD AG or generate 15.47% return on investment over 90 days.

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

Willis Towers Watson  vs.  KOWORLD AG

Willis Towers Watson

Risk-Adjusted Performance

Very Weak

Over the last 90 days Willis Towers Watson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Willis Towers is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

KOWORLD AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KOWORLD AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, KOWORLD AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Willis Towers and KOWORLD AG

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

The idea behind Willis Towers Watson and KOWORLD AG 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.