Correlation Between WHA Public and WHA Utilities

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

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

Diversification Opportunities for WHA Public and WHA Utilities

0.65

Correlation Coefficient

WHA Public  WHA Utilities

Poor diversification

The 3 months correlation between WHA and WHA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding WHA 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 WHA Public 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 WHA 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 WHA Public i.e., WHA Public and WHA Utilities go up and down completely randomly.

Pair Corralation between WHA Public and WHA Utilities

Assuming the 90 days trading horizon WHA Public is expected to generate 1.16 times more return on investment than WHA Utilities. However, WHA Public is 1.16 times more volatile than WHA Utilities and. It trades about -0.21 of its potential returns per unit of risk. WHA Utilities and is currently generating about -0.34 per unit of risk. If you would invest  575.00  in WHA Public on October 9, 2024 and sell it today you would lose (45.00) from holding WHA Public or give up 7.83% of portfolio value over 90 days.

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

WHA Public  vs.  WHA Utilities and

WHA Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WHA Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, WHA Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional 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 latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with WHA Public and WHA Utilities

The main advantage of trading using opposite WHA Public and WHA Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WHA Public 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 WHA 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.