Correlation Between Turquoise Hill and Western Digital

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

By analyzing existing cross correlation between Turquoise Hill Resources and Western Digital, you can compare the effects of market volatilities on Turquoise Hill and Western Digital 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 Turquoise Hill with a short position of Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turquoise Hill and Western Digital.

Diversification Opportunities for Turquoise Hill and Western Digital

0.0

Correlation Coefficient

Turquoise Hill  Western Digital

Pay attention - limited upside

The 3 months correlation between Turquoise and Western is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Turquoise Hill Resources and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and Turquoise Hill 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 Turquoise Hill Resources are associated (or correlated) with Western Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Digital has no effect on the direction of Turquoise Hill i.e., Turquoise Hill and Western Digital go up and down completely randomly.

Pair Corralation between Turquoise Hill and Western Digital

If you would invest (100.00) in Turquoise Hill Resources on December 4, 2024 and sell it today you would earn a total of  100.00  from holding Turquoise Hill Resources or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Turquoise Hill Resources  vs.  Western Digital

Turquoise Hill Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Turquoise Hill Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Turquoise Hill is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Western Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Western Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Turquoise Hill and Western Digital

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

The idea behind Turquoise Hill Resources and Western Digital 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.