Correlation Between WH Group and TCL Electronics
Can any of the company-specific risk be diversified away by investing in both WH Group and TCL Electronics 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 TCL Electronics 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 TCL Electronics Holdings, you can compare the effects of market volatilities on WH Group and TCL Electronics 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 TCL Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of WH Group and TCL Electronics.
Diversification Opportunities for WH Group and TCL Electronics
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WHGRF and TCL is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding WH Group Limited and TCL Electronics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCL Electronics Holdings 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 TCL Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCL Electronics Holdings has no effect on the direction of WH Group i.e., WH Group and TCL Electronics go up and down completely randomly.
Pair Corralation between WH Group and TCL Electronics
Assuming the 90 days horizon WH Group Limited is expected to under-perform the TCL Electronics. But the pink sheet apears to be less risky and, when comparing its historical volatility, WH Group Limited is 2.33 times less risky than TCL Electronics. The pink sheet trades about -0.11 of its potential returns per unit of risk. The TCL Electronics Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 81.00 in TCL Electronics Holdings on November 3, 2024 and sell it today you would earn a total of 5.00 from holding TCL Electronics Holdings or generate 6.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
WH Group Limited vs. TCL Electronics Holdings
Performance |
| Timeline |
| WH Group Limited |
| TCL Electronics Holdings |
WH Group and TCL Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WH Group and TCL Electronics
The main advantage of trading using opposite WH Group and TCL Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WH Group position performs unexpectedly, TCL Electronics 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 TCL Electronics will offset losses from the drop in TCL Electronics' 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 |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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