Correlation Between WHA Utilities and Wp Energy

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

Diversification Opportunities for WHA Utilities and Wp Energy

0.24

Correlation Coefficient

WHA Utilities  Wp Energy

Modest diversification

The 3 months correlation between WHA and Wp Energy is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding WHA Utilities and and Wp Energy Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wp Energy Public 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 Wp Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wp Energy Public has no effect on the direction of WHA Utilities i.e., WHA Utilities and Wp Energy go up and down completely randomly.

Pair Corralation between WHA Utilities and Wp Energy

Assuming the 90 days trading horizon WHA Utilities and is expected to under-perform the Wp Energy. In addition to that, WHA Utilities is 2.25 times more volatile than Wp Energy Public. It trades about -0.18 of its total potential returns per unit of risk. Wp Energy Public is currently generating about 0.0 per unit of volatility. If you would invest  348.00  in Wp Energy Public on December 30, 2024 and sell it today you would lose (2.00) from holding Wp Energy Public or give up 0.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

WHA Utilities and  vs.  Wp Energy Public

WHA Utilities

Risk-Adjusted Performance

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 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.

Wp Energy Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wp Energy Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Wp Energy 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 Utilities and Wp Energy

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

The idea behind WHA Utilities and and Wp Energy 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.