Correlation Between Quality Houses and WHA Industrial

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

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

Diversification Opportunities for Quality Houses and WHA Industrial

0.13

Correlation Coefficient

Quality Houses  WHA Industrial

Average diversification

The 3 months correlation between Quality and WHA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Quality Houses Hotel 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 Quality Houses 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 Quality Houses Hotel 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 Quality Houses i.e., Quality Houses and WHA Industrial go up and down completely randomly.

Pair Corralation between Quality Houses and WHA Industrial

Assuming the 90 days trading horizon Quality Houses Hotel is expected to under-perform the WHA Industrial. In addition to that, Quality Houses is 16.64 times more volatile than WHA Industrial Leasehold. It trades about -0.16 of its total potential returns per unit of risk. WHA Industrial Leasehold is currently generating about 0.12 per unit of volatility. If you would invest  633.00  in WHA Industrial Leasehold on October 10, 2024 and sell it today you would earn a total of  27.00  from holding WHA Industrial Leasehold or generate 4.27% return on investment over 90 days.

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

Quality Houses Hotel  vs.  WHA Industrial Leasehold

Quality Houses Hotel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quality Houses Hotel 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

WHA Industrial Leasehold

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Industrial Leasehold are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, WHA Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Quality Houses and WHA Industrial

The main advantage of trading using opposite Quality Houses and WHA Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quality Houses 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 Quality Houses Hotel 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.