Correlation Between Digital Telecommunicatio and WHA Premium

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

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

Diversification Opportunities for Digital Telecommunicatio and WHA Premium

-0.25

Correlation Coefficient

Digital Telecommunicatio  WHA Premium

Very good diversification

The 3 months correlation between Digital and WHA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Digital Telecommunications Inf 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 Digital Telecommunicatio 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 Digital Telecommunications Infrastructure 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 Digital Telecommunicatio i.e., Digital Telecommunicatio and WHA Premium go up and down completely randomly.

Pair Corralation between Digital Telecommunicatio and WHA Premium

Assuming the 90 days trading horizon Digital Telecommunications Infrastructure is expected to under-perform the WHA Premium. In addition to that, Digital Telecommunicatio is 1.14 times more volatile than WHA Premium Growth. It trades about -0.1 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

Digital Telecommunications Inf  vs.  WHA Premium Growth

Digital Telecommunicatio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digital Telecommunications Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Digital Telecommunicatio is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional 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 Digital Telecommunicatio and WHA Premium

The main advantage of trading using opposite Digital Telecommunicatio and WHA Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Telecommunicatio 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 Digital Telecommunications Infrastructure 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.