Correlation Between Wesana Health and GH Research

Can any of the company-specific risk be diversified away by investing in both Wesana Health and GH Research 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 Wesana Health and GH Research into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wesana Health Holdings and GH Research PLC, you can compare the effects of market volatilities on Wesana Health and GH Research 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 Wesana Health with a short position of GH Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesana Health and GH Research.

Diversification Opportunities for Wesana Health and GH Research

-0.14

Correlation Coefficient

Wesana Health  GH Research

Good diversification

The 3 months correlation between Wesana and GHRS is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Wesana Health Holdings and GH Research PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GH Research PLC and Wesana Health 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 Wesana Health Holdings are associated (or correlated) with GH Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GH Research PLC has no effect on the direction of Wesana Health i.e., Wesana Health and GH Research go up and down completely randomly.

Pair Corralation between Wesana Health and GH Research

Assuming the 90 days horizon Wesana Health Holdings is expected to generate 12.97 times more return on investment than GH Research. However, Wesana Health is 12.97 times more volatile than GH Research PLC. It trades about 0.18 of its potential returns per unit of risk. GH Research PLC is currently generating about 0.03 per unit of risk. If you would invest  0.75  in Wesana Health Holdings on October 11, 2024 and sell it today you would lose (0.48) from holding Wesana Health Holdings or give up 64.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

Wesana Health Holdings  vs.  GH Research PLC

Wesana Health Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wesana Health Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Wesana Health reported solid returns over the last few months and may actually be approaching a breakup point.

GH Research PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GH Research PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, GH Research unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wesana Health and GH Research

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

The idea behind Wesana Health Holdings and GH Research PLC 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.