Correlation Between BA Airport and WHA Industrial

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

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

Diversification Opportunities for BA Airport and WHA Industrial

0.03

Correlation Coefficient

BA Airport  WHA Industrial

Significant diversification

The 3 months correlation between BAREIT and WHA is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding BA Airport Leasehold 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 BA Airport 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 BA Airport Leasehold 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 BA Airport i.e., BA Airport and WHA Industrial go up and down completely randomly.

Pair Corralation between BA Airport and WHA Industrial

Assuming the 90 days trading horizon BA Airport Leasehold is expected to under-perform the WHA Industrial. But the stock apears to be less risky and, when comparing its historical volatility, BA Airport Leasehold is 1.49 times less risky than WHA Industrial. The stock trades about -0.04 of its potential returns per unit of risk. The WHA Industrial Leasehold is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  588.00  in WHA Industrial Leasehold on September 11, 2024 and sell it today you would earn a total of  57.00  from holding WHA Industrial Leasehold or generate 9.69% return on investment over 90 days.

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

BA Airport Leasehold  vs.  WHA Industrial Leasehold

BA Airport Leasehold

Risk-Adjusted Performance

0 of 100

Very Weak

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

WHA Industrial Leasehold

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Industrial Leasehold are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, WHA Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BA Airport and WHA Industrial

The main advantage of trading using opposite BA Airport and WHA Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BA Airport 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 BA Airport Leasehold 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.