Correlation Between WH Group and BASE
Can any of the company-specific risk be diversified away by investing in both WH Group and BASE 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 BASE 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 BASE Inc, you can compare the effects of market volatilities on WH Group and BASE 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 BASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of WH Group and BASE.
Diversification Opportunities for WH Group and BASE
Very weak diversification
The 3 months correlation between WHGRF and BASE is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding WH Group Limited and BASE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASE Inc 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 BASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASE Inc has no effect on the direction of WH Group i.e., WH Group and BASE go up and down completely randomly.
Pair Corralation between WH Group and BASE
Assuming the 90 days horizon WH Group Limited is expected to generate 1.7 times more return on investment than BASE. However, WH Group is 1.7 times more volatile than BASE Inc. It trades about 0.09 of its potential returns per unit of risk. BASE Inc is currently generating about 0.03 per unit of risk. If you would invest 34.00 in WH Group Limited on November 4, 2024 and sell it today you would earn a total of 44.00 from holding WH Group Limited or generate 129.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 79.44% |
| Values | Daily Returns |
WH Group Limited vs. BASE Inc
Performance |
| Timeline |
| WH Group Limited |
| BASE Inc |
WH Group and BASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WH Group and BASE
The main advantage of trading using opposite WH Group and BASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WH Group position performs unexpectedly, BASE 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 BASE will offset losses from the drop in BASE's long position.| WH Group vs. Premier Foods Plc | WH Group vs. Torque Lifestyle Brands | WH Group vs. Naturally Splendid Enterprises | WH Group vs. Aryzta AG PK |
| BASE vs. CurrentC Power | BASE vs. Agent Information Software | BASE vs. Auddia Inc | BASE vs. Maxwell Resource |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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