Correlation Between WHA Premium and Centara Hotels

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

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

Diversification Opportunities for WHA Premium and Centara Hotels

0.0

Correlation Coefficient

WHA Premium  Centara Hotels

Pay attention - limited upside

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

Pair Corralation between WHA Premium and Centara Hotels

Assuming the 90 days trading horizon WHA Premium is expected to generate 554.84 times less return on investment than Centara Hotels. But when comparing it to its historical volatility, WHA Premium Growth is 143.39 times less risky than Centara Hotels. It trades about 0.03 of its potential returns per unit of risk. Centara Hotels Resorts is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  442.00  in Centara Hotels Resorts on December 30, 2024 and sell it today you would earn a total of  14.00  from holding Centara Hotels Resorts or generate 3.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

WHA Premium Growth  vs.  Centara Hotels Resorts

WHA Premium Growth

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Premium Growth are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, WHA Premium is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Centara Hotels Resorts

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centara Hotels Resorts are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Centara Hotels sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WHA Premium and Centara Hotels

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

The idea behind WHA Premium Growth and Centara Hotels Resorts 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.