Correlation Between CPN Retail and WHA Industrial

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

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

Diversification Opportunities for CPN Retail and WHA Industrial

0.03

Correlation Coefficient

CPN Retail  WHA Industrial

Significant diversification

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

Pair Corralation between CPN Retail and WHA Industrial

Assuming the 90 days trading horizon CPN Retail is expected to generate 1.67 times less return on investment than WHA Industrial. In addition to that, CPN Retail is 1.71 times more volatile than WHA Industrial Leasehold. It trades about 0.08 of its total potential returns per unit of risk. WHA Industrial Leasehold is currently generating about 0.23 per unit of volatility. If you would invest  563.00  in WHA Industrial Leasehold on September 3, 2024 and sell it today you would earn a total of  97.00  from holding WHA Industrial Leasehold or generate 17.23% return on investment over 90 days.

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

CPN Retail Growth  vs.  WHA Industrial Leasehold

CPN Retail Growth

Risk-Adjusted Performance

6 of 100

Modest

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

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 CPN Retail and WHA Industrial

The main advantage of trading using opposite CPN Retail and WHA Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPN Retail 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 CPN Retail Growth 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.