Correlation Between ALL ENERGY and WHA Industrial

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

By analyzing existing cross correlation between ALL ENERGY UTILITIES and WHA Industrial Leasehold, you can compare the effects of market volatilities on ALL ENERGY and WHA Industrial 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 ALL ENERGY with a short position of WHA Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALL ENERGY and WHA Industrial.

Diversification Opportunities for ALL ENERGY and WHA Industrial

-0.03

Correlation Coefficient

ALL ENERGY  WHA Industrial

Good diversification

The 3 months correlation between ALL and WHA is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding ALL ENERGY UTILITIES and WHA Industrial Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHA Industrial Leasehold and ALL ENERGY 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 ALL ENERGY UTILITIES are associated (or correlated) with WHA Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHA Industrial Leasehold has no effect on the direction of ALL ENERGY i.e., ALL ENERGY and WHA Industrial go up and down completely randomly.

Pair Corralation between ALL ENERGY and WHA Industrial

Assuming the 90 days horizon ALL ENERGY UTILITIES is expected to generate 4.54 times more return on investment than WHA Industrial. However, ALL ENERGY is 4.54 times more volatile than WHA Industrial Leasehold. It trades about 0.06 of its potential returns per unit of risk. WHA Industrial Leasehold is currently generating about 0.23 per unit of risk. If you would invest  18.00  in ALL ENERGY UTILITIES on September 3, 2024 and sell it today you would earn a total of  2.00  from holding ALL ENERGY UTILITIES or generate 11.11% return on investment over 90 days.

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

ALL ENERGY UTILITIES  vs.  WHA Industrial Leasehold

ALL ENERGY UTILITIES

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ALL ENERGY UTILITIES are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, ALL ENERGY disclosed solid returns over the last few months and may actually be approaching a breakup point.

WHA Industrial Leasehold

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Industrial Leasehold are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, WHA Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALL ENERGY and WHA Industrial

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

The idea behind ALL ENERGY UTILITIES and WHA Industrial Leasehold 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.