Correlation Between WH Group and Cielo SA

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

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

Diversification Opportunities for WH Group and Cielo SA

-0.31

Correlation Coefficient

WH Group  Cielo SA

Very good diversification

The 3 months correlation between WHGRF and Cielo is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding WH Group Limited and Cielo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cielo SA and WH Group 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 WH Group Limited are associated (or correlated) with Cielo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cielo SA has no effect on the direction of WH Group i.e., WH Group and Cielo SA go up and down completely randomly.

Pair Corralation between WH Group and Cielo SA

If you would invest  79.00  in WH Group Limited on September 22, 2024 and sell it today you would earn a total of  2.00  from holding WH Group Limited or generate 2.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

WH Group Limited  vs.  Cielo SA

WH Group Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WH Group Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, WH Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cielo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cielo SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cielo SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WH Group and Cielo SA

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

The idea behind WH Group Limited and Cielo SA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.