Correlation Between WHA Industrial and SCB X

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

Diversification Opportunities for WHA Industrial and SCB X

-0.57

Correlation Coefficient

WHA Industrial  SCB X

Excellent diversification

The 3 months correlation between WHA and SCB is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding WHA Industrial Leasehold and SCB X Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCB X Public 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 SCB X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCB X Public has no effect on the direction of WHA Industrial i.e., WHA Industrial and SCB X go up and down completely randomly.

Pair Corralation between WHA Industrial and SCB X

Assuming the 90 days trading horizon WHA Industrial Leasehold is expected to under-perform the SCB X. In addition to that, WHA Industrial is 1.08 times more volatile than SCB X Public. It trades about -0.01 of its total potential returns per unit of risk. SCB X Public is currently generating about 0.08 per unit of volatility. If you would invest  8,416  in SCB X Public on December 1, 2024 and sell it today you would earn a total of  3,784  from holding SCB X Public or generate 44.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

WHA Industrial Leasehold  vs.  SCB X Public

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 conflicting 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.

SCB X Public

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCB X Public are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, SCB X 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 SCB X

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

The idea behind WHA Industrial Leasehold and SCB X 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.