Correlation Between Intouch Holdings and WHA Utilities

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

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

Diversification Opportunities for Intouch Holdings and WHA Utilities

0.52

Correlation Coefficient

Intouch Holdings  WHA Utilities

Very weak diversification

The 3 months correlation between Intouch and WHA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Intouch Holdings Public and WHA Utilities and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHA Utilities and Intouch Holdings 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 Intouch Holdings Public 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 Intouch Holdings i.e., Intouch Holdings and WHA Utilities go up and down completely randomly.

Pair Corralation between Intouch Holdings and WHA Utilities

Assuming the 90 days trading horizon Intouch Holdings Public is expected to generate 0.91 times more return on investment than WHA Utilities. However, Intouch Holdings Public is 1.1 times less risky than WHA Utilities. It trades about -0.04 of its potential returns per unit of risk. WHA Utilities and is currently generating about -0.22 per unit of risk. If you would invest  10,450  in Intouch Holdings Public on October 26, 2024 and sell it today you would lose (550.00) from holding Intouch Holdings Public or give up 5.26% of portfolio value over 90 days.

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

Intouch Holdings Public  vs.  WHA Utilities and

Intouch Holdings Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intouch Holdings Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Intouch Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

WHA Utilities

Risk-Adjusted Performance

0 of 100

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Intouch Holdings and WHA Utilities

The main advantage of trading using opposite Intouch Holdings and WHA Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intouch Holdings 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 Intouch Holdings Public 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.