Correlation Between WHA Utilities and Central Plaza

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

Diversification Opportunities for WHA Utilities and Central Plaza

0.0

Correlation Coefficient

WHA Utilities  Central Plaza

Pay attention - limited upside

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

Pair Corralation between WHA Utilities and Central Plaza

If you would invest  405.00  in WHA Utilities and on October 7, 2024 and sell it today you would earn a total of  59.00  from holding WHA Utilities and or generate 14.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.83%
Values	Daily Returns

WHA Utilities and  vs.  Central Plaza Hotel

WHA Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WHA Utilities and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, WHA Utilities is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Central Plaza Hotel

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Central Plaza Hotel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Central Plaza is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WHA Utilities and Central Plaza

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

The idea behind WHA Utilities and and Central Plaza Hotel 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.