Correlation Between Tipco Asphalt and WHA Public

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

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

Diversification Opportunities for Tipco Asphalt and WHA Public

0.92

Correlation Coefficient

Tipco Asphalt  WHA Public

Almost no diversification

The 3 months correlation between Tipco and WHA is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Tipco Asphalt Public and WHA Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHA Public and Tipco Asphalt 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 Tipco Asphalt Public are associated (or correlated) with WHA Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHA Public has no effect on the direction of Tipco Asphalt i.e., Tipco Asphalt and WHA Public go up and down completely randomly.

Pair Corralation between Tipco Asphalt and WHA Public

Assuming the 90 days trading horizon Tipco Asphalt Public is expected to generate 0.43 times more return on investment than WHA Public. However, Tipco Asphalt Public is 2.31 times less risky than WHA Public. It trades about -0.15 of its potential returns per unit of risk. WHA Public is currently generating about -0.18 per unit of risk. If you would invest  1,712  in Tipco Asphalt Public on December 28, 2024 and sell it today you would lose (242.00) from holding Tipco Asphalt Public or give up 14.14% of portfolio value over 90 days.

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

Tipco Asphalt Public  vs.  WHA Public

Tipco Asphalt Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tipco Asphalt Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

WHA Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days WHA Public 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 basic indicators 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.

Pair Trading with Tipco Asphalt and WHA Public

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

The idea behind Tipco Asphalt Public and WHA Public 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.