Correlation Between WHA Industrial and Laguna Resorts

Can any of the company-specific risk be diversified away by investing in both WHA Industrial and Laguna Resorts 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 Laguna Resorts 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 Laguna Resorts Hotels, you can compare the effects of market volatilities on WHA Industrial and Laguna Resorts 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 Laguna Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of WHA Industrial and Laguna Resorts.

Diversification Opportunities for WHA Industrial and Laguna Resorts

0.58

Correlation Coefficient

WHA Industrial  Laguna Resorts

Very weak diversification

The 3 months correlation between WHA and Laguna is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding WHA Industrial Leasehold and Laguna Resorts Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laguna Resorts Hotels 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 Laguna Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laguna Resorts Hotels has no effect on the direction of WHA Industrial i.e., WHA Industrial and Laguna Resorts go up and down completely randomly.

Pair Corralation between WHA Industrial and Laguna Resorts

Assuming the 90 days trading horizon WHA Industrial is expected to generate 58.09 times less return on investment than Laguna Resorts. But when comparing it to its historical volatility, WHA Industrial Leasehold is 86.32 times less risky than Laguna Resorts. It trades about 0.12 of its potential returns per unit of risk. Laguna Resorts Hotels is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,900  in Laguna Resorts Hotels on October 22, 2024 and sell it today you would earn a total of  50.00  from holding Laguna Resorts Hotels or generate 1.28% return on investment over 90 days.

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

WHA Industrial Leasehold  vs.  Laguna Resorts Hotels

WHA Industrial Leasehold

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Industrial Leasehold are ranked lower than 8 (%) 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.

Laguna Resorts Hotels

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Laguna Resorts Hotels are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, Laguna Resorts is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with WHA Industrial and Laguna Resorts

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

The idea behind WHA Industrial Leasehold and Laguna Resorts Hotels 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.