Correlation Between WHA Utilities and BTS Group

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

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

Diversification Opportunities for WHA Utilities and BTS Group

-0.02

Correlation Coefficient

WHA Utilities  BTS Group

Good diversification

The 3 months correlation between WHA and BTS is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding WHA Utilities and and BTS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS Group Holdings and WHA Utilities 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 Utilities and are associated (or correlated) with BTS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTS Group Holdings has no effect on the direction of WHA Utilities i.e., WHA Utilities and BTS Group go up and down completely randomly.

Pair Corralation between WHA Utilities and BTS Group

Assuming the 90 days trading horizon WHA Utilities is expected to generate 1.45 times less return on investment than BTS Group. But when comparing it to its historical volatility, WHA Utilities and is 1.02 times less risky than BTS Group. It trades about 0.09 of its potential returns per unit of risk. BTS Group Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  434.00  in BTS Group Holdings on September 28, 2024 and sell it today you would earn a total of  131.00  from holding BTS Group Holdings or generate 30.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.04%
Values	Daily Returns

WHA Utilities and  vs.  BTS Group Holdings

WHA Utilities

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Utilities and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, WHA Utilities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BTS Group Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BTS Group Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, BTS Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WHA Utilities and BTS Group

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

The idea behind WHA Utilities and and BTS Group Holdings 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.