Correlation Between Beauty Community and WHA Public

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

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

Diversification Opportunities for Beauty Community and WHA Public

0.09

Correlation Coefficient

Beauty Community  WHA Public

Significant diversification

The 3 months correlation between Beauty and WHA is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Beauty Community Public and WHA Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHA Public and Beauty Community 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 Beauty Community Public are associated (or correlated) with WHA Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHA Public has no effect on the direction of Beauty Community i.e., Beauty Community and WHA Public go up and down completely randomly.

Pair Corralation between Beauty Community and WHA Public

Assuming the 90 days trading horizon Beauty Community Public is expected to generate 63.16 times more return on investment than WHA Public. However, Beauty Community is 63.16 times more volatile than WHA Public. It trades about 0.11 of its potential returns per unit of risk. WHA Public is currently generating about 0.08 per unit of risk. If you would invest  43.00  in Beauty Community Public on September 2, 2024 and sell it today you would lose (3.00) from holding Beauty Community Public or give up 6.98% of portfolio value over 90 days.

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

Beauty Community Public  vs.  WHA Public

Beauty Community Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beauty Community Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Beauty Community sustained solid returns over the last few months and may actually be approaching a breakup point.

WHA Public

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, WHA Public may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Beauty Community and WHA Public

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

The idea behind Beauty Community Public and WHA Public 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.