Correlation Between WHA Industrial and BA Airport

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

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

Diversification Opportunities for WHA Industrial and BA Airport

-0.62

Correlation Coefficient

WHA Industrial  BA Airport

Excellent diversification

The 3 months correlation between WHA and BAREIT is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding WHA Industrial Leasehold and BA Airport Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BA Airport Leasehold and WHA Industrial 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 Industrial Leasehold are associated (or correlated) with BA Airport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BA Airport Leasehold has no effect on the direction of WHA Industrial i.e., WHA Industrial and BA Airport go up and down completely randomly.

Pair Corralation between WHA Industrial and BA Airport

Assuming the 90 days trading horizon WHA Industrial Leasehold is expected to under-perform the BA Airport. In addition to that, WHA Industrial is 2.12 times more volatile than BA Airport Leasehold. It trades about -0.11 of its total potential returns per unit of risk. BA Airport Leasehold is currently generating about 0.02 per unit of volatility. If you would invest  921.00  in BA Airport Leasehold on December 30, 2024 and sell it today you would earn a total of  9.00  from holding BA Airport Leasehold or generate 0.98% return on investment over 90 days.

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

WHA Industrial Leasehold  vs.  BA Airport Leasehold

WHA Industrial Leasehold

Risk-Adjusted Performance

Very Weak

Over the last 90 days WHA Industrial Leasehold 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.

BA Airport Leasehold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BA Airport Leasehold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BA Airport is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WHA Industrial and BA Airport

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

The idea behind WHA Industrial Leasehold and BA Airport 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.