Correlation Between Amata Summit and WHA Premium

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

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

Diversification Opportunities for Amata Summit and WHA Premium

-0.36

Correlation Coefficient

Amata Summit  WHA Premium

Very good diversification

The 3 months correlation between Amata and WHA is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Amata Summit Growth and WHA Premium Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHA Premium Growth and Amata Summit 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 Amata Summit Growth are associated (or correlated) with WHA Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHA Premium Growth has no effect on the direction of Amata Summit i.e., Amata Summit and WHA Premium go up and down completely randomly.

Pair Corralation between Amata Summit and WHA Premium

Assuming the 90 days trading horizon Amata Summit Growth is expected to under-perform the WHA Premium. In addition to that, Amata Summit is 1.9 times more volatile than WHA Premium Growth. It trades about -0.02 of its total potential returns per unit of risk. WHA Premium Growth is currently generating about 0.03 per unit of volatility. If you would invest  1,006  in WHA Premium Growth on December 30, 2024 and sell it today you would earn a total of  14.00  from holding WHA Premium Growth or generate 1.39% return on investment over 90 days.

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

Amata Summit Growth  vs.  WHA Premium Growth

Amata Summit Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amata Summit Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Amata Summit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

WHA Premium Growth

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Premium Growth are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, WHA Premium is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amata Summit and WHA Premium

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

The idea behind Amata Summit Growth and WHA Premium Growth 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.