Correlation Between Ally Leasehold and WHA Industrial

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

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

Diversification Opportunities for Ally Leasehold and WHA Industrial

0.68

Correlation Coefficient

Ally Leasehold  WHA Industrial

Poor diversification

The 3 months correlation between Ally and WHA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ally Leasehold Real 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 Ally Leasehold 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 Ally Leasehold Real 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 Ally Leasehold i.e., Ally Leasehold and WHA Industrial go up and down completely randomly.

Pair Corralation between Ally Leasehold and WHA Industrial

Assuming the 90 days trading horizon Ally Leasehold Real is expected to generate 1.41 times more return on investment than WHA Industrial. However, Ally Leasehold is 1.41 times more volatile than WHA Industrial Leasehold. It trades about 0.2 of its potential returns per unit of risk. WHA Industrial Leasehold is currently generating about 0.22 per unit of risk. If you would invest  431.00  in Ally Leasehold Real on September 4, 2024 and sell it today you would earn a total of  89.00  from holding Ally Leasehold Real or generate 20.65% return on investment over 90 days.

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

Ally Leasehold Real  vs.  WHA Industrial Leasehold

Ally Leasehold Real

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ally Leasehold Real are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Ally Leasehold disclosed solid returns over the last few months and may actually be approaching a breakup point.

WHA Industrial Leasehold

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Industrial Leasehold are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, WHA Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ally Leasehold and WHA Industrial

The main advantage of trading using opposite Ally Leasehold and WHA Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Leasehold 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 Ally Leasehold Real 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.