Correlation Between WHA Premium and Digital Telecommunicatio

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

Diversification Opportunities for WHA Premium and Digital Telecommunicatio

-0.25

Correlation Coefficient

WHA Premium  Digital Telecommunicatio

Very good diversification

The 3 months correlation between WHA and Digital is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding WHA Premium Growth and Digital Telecommunications Inf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Telecommunicatio 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 Digital Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Telecommunicatio has no effect on the direction of WHA Premium i.e., WHA Premium and Digital Telecommunicatio go up and down completely randomly.

Pair Corralation between WHA Premium and Digital Telecommunicatio

Assuming the 90 days trading horizon WHA Premium Growth is expected to generate 0.88 times more return on investment than Digital Telecommunicatio. However, WHA Premium Growth is 1.14 times less risky than Digital Telecommunicatio. It trades about 0.03 of its potential returns per unit of risk. Digital Telecommunications Infrastructure is currently generating about -0.1 per unit of risk. If you would invest  1,006  in WHA Premium Growth on December 30, 2024 and sell it today you would earn a total of  14.00  from holding WHA Premium Growth or generate 1.39% return on investment over 90 days.

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

WHA Premium Growth  vs.  Digital Telecommunications Inf

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.

Digital Telecommunicatio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digital Telecommunications Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Digital Telecommunicatio is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with WHA Premium and Digital Telecommunicatio

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

The idea behind WHA Premium Growth and Digital Telecommunications Infrastructure 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.