Correlation Between Global Power and WHA Utilities

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

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

Diversification Opportunities for Global Power and WHA Utilities

0.97

Correlation Coefficient

Global Power  WHA Utilities

Almost no diversification

The 3 months correlation between Global and WHA is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Global Power Synergy and WHA Utilities and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHA Utilities and Global Power 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 Global Power Synergy are associated (or correlated) with WHA Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHA Utilities has no effect on the direction of Global Power i.e., Global Power and WHA Utilities go up and down completely randomly.

Pair Corralation between Global Power and WHA Utilities

Assuming the 90 days trading horizon Global Power Synergy is expected to generate 1.39 times more return on investment than WHA Utilities. However, Global Power is 1.39 times more volatile than WHA Utilities and. It trades about -0.12 of its potential returns per unit of risk. WHA Utilities and is currently generating about -0.17 per unit of risk. If you would invest  3,838  in Global Power Synergy on December 22, 2024 and sell it today you would lose (988.00) from holding Global Power Synergy or give up 25.74% of portfolio value over 90 days.

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

Global Power Synergy  vs.  WHA Utilities and

Global Power Synergy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Power Synergy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

WHA Utilities

Risk-Adjusted Performance

Very Weak

Over the last 90 days WHA Utilities and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Global Power and WHA Utilities

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

The idea behind Global Power Synergy and WHA Utilities and 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.