Correlation Between WH Group and Campbell Soup

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

Diversification Opportunities for WH Group and Campbell Soup

-0.06

Correlation Coefficient

WH Group  Campbell Soup

Good diversification

The 3 months correlation between WHGRF and Campbell is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding WH Group Limited and Campbell Soup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campbell Soup 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 Campbell Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campbell Soup has no effect on the direction of WH Group i.e., WH Group and Campbell Soup go up and down completely randomly.

Pair Corralation between WH Group and Campbell Soup

Assuming the 90 days horizon WH Group Limited is expected to generate 2.75 times more return on investment than Campbell Soup. However, WH Group is 2.75 times more volatile than Campbell Soup. It trades about 0.04 of its potential returns per unit of risk. Campbell Soup is currently generating about -0.07 per unit of risk. If you would invest  81.00  in WH Group Limited on December 20, 2024 and sell it today you would earn a total of  5.00  from holding WH Group Limited or generate 6.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

WH Group Limited  vs.  Campbell Soup

WH Group Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WH Group Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, WH Group reported solid returns over the last few months and may actually be approaching a breakup point.

Campbell Soup

Risk-Adjusted Performance

Very Weak

Over the last 90 days Campbell Soup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with WH Group and Campbell Soup

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

The idea behind WH Group Limited and Campbell Soup 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.