Correlation Between WHA Public and Power Solution
Can any of the company-specific risk be diversified away by investing in both WHA Public and Power Solution 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 Public and Power Solution into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WHA Public and Power Solution Technologies, you can compare the effects of market volatilities on WHA Public and Power Solution 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 Public with a short position of Power Solution. Check out your portfolio center. Please also check ongoing floating volatility patterns of WHA Public and Power Solution.
Diversification Opportunities for WHA Public and Power Solution
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between WHA and Power is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding WHA Public and Power Solution Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Solution Techn and WHA Public 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 Public are associated (or correlated) with Power Solution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Solution Techn has no effect on the direction of WHA Public i.e., WHA Public and Power Solution go up and down completely randomly.
Pair Corralation between WHA Public and Power Solution
Assuming the 90 days trading horizon WHA Public is expected to generate 26.48 times less return on investment than Power Solution. But when comparing it to its historical volatility, WHA Public is 30.84 times less risky than Power Solution. It trades about 0.05 of its potential returns per unit of risk. Power Solution Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 107.00 in Power Solution Technologies on August 28, 2024 and sell it today you would lose (63.00) from holding Power Solution Technologies or give up 58.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WHA Public vs. Power Solution Technologies
Performance |
| Timeline |
| WHA Public |
| Power Solution Techn |
WHA Public and Power Solution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WHA Public and Power Solution
The main advantage of trading using opposite WHA Public and Power Solution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WHA Public position performs unexpectedly, Power Solution 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 Power Solution will offset losses from the drop in Power Solution's long position.The idea behind WHA Public and Power Solution Technologies 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.| Power Solution vs. WHA Public | Power Solution vs. Siri Prime Office | Power Solution vs. Ananda Development Public | Power Solution vs. Bangkok Land Public |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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