Correlation Between TPI Polene and WHA Utilities
Can any of the company-specific risk be diversified away by investing in both TPI Polene and WHA Utilities 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 TPI Polene and WHA Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPI Polene Power and WHA Utilities and, you can compare the effects of market volatilities on TPI Polene and WHA Utilities 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 TPI Polene with a short position of WHA Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPI Polene and WHA Utilities.
Diversification Opportunities for TPI Polene and WHA Utilities
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TPI and WHA is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding TPI Polene Power and WHA Utilities and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHA Utilities and TPI Polene 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 TPI Polene Power are associated (or correlated) with WHA Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHA Utilities has no effect on the direction of TPI Polene i.e., TPI Polene and WHA Utilities go up and down completely randomly.
Pair Corralation between TPI Polene and WHA Utilities
Assuming the 90 days trading horizon TPI Polene is expected to generate 5.45 times less return on investment than WHA Utilities. But when comparing it to its historical volatility, TPI Polene Power is 1.9 times less risky than WHA Utilities. It trades about 0.02 of its potential returns per unit of risk. WHA Utilities and is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 357.00 in WHA Utilities and on August 28, 2024 and sell it today you would earn a total of 137.00 from holding WHA Utilities and or generate 38.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TPI Polene Power vs. WHA Utilities and
Performance |
| Timeline |
| TPI Polene Power |
| WHA Utilities |
TPI Polene and WHA Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPI Polene and WHA Utilities
The main advantage of trading using opposite TPI Polene and WHA Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPI Polene position performs unexpectedly, WHA Utilities 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 WHA Utilities will offset losses from the drop in WHA Utilities' long position.The idea behind TPI Polene Power and WHA Utilities and 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.| WHA Utilities vs. WHA Public | WHA Utilities vs. Global Power Synergy | WHA Utilities vs. TPI Polene Power | WHA Utilities vs. Bangkok Expressway and |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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