Correlation Between Danone PK and WH Group
Can any of the company-specific risk be diversified away by investing in both Danone PK and WH Group 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 Danone PK and WH Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danone PK and WH Group Limited, you can compare the effects of market volatilities on Danone PK and WH Group 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 Danone PK with a short position of WH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone PK and WH Group.
Diversification Opportunities for Danone PK and WH Group
Excellent diversification
The 3 months correlation between Danone and WHGRF is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Danone PK and WH Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WH Group Limited and Danone PK 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 Danone PK are associated (or correlated) with WH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WH Group Limited has no effect on the direction of Danone PK i.e., Danone PK and WH Group go up and down completely randomly.
Pair Corralation between Danone PK and WH Group
If you would invest 68.00 in WH Group Limited on September 5, 2024 and sell it today you would earn a total of 11.00 from holding WH Group Limited or generate 16.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 1.54% |
Values | Daily Returns |
Danone PK vs. WH Group Limited
Performance |
Timeline |
Danone PK |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
WH Group Limited |
Danone PK and WH Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Danone PK and WH Group
The main advantage of trading using opposite Danone PK and WH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone PK position performs unexpectedly, WH Group 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 WH Group will offset losses from the drop in WH Group's long position.Danone PK vs. Heineken NV | Danone PK vs. Reckitt Benckiser Group | Danone PK vs. LOreal Co ADR | Danone PK vs. BASF SE ADR |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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