Correlation Between President Bakery and WHA Utilities

Can any of the company-specific risk be diversified away by investing in both President Bakery 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 President Bakery and WHA Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between President Bakery Public and WHA Utilities and, you can compare the effects of market volatilities on President Bakery 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 President Bakery with a short position of WHA Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Bakery and WHA Utilities.

Diversification Opportunities for President Bakery and WHA Utilities

-0.14

Correlation Coefficient

President Bakery  WHA Utilities

Good diversification

The 3 months correlation between President and WHA is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding President Bakery Public and WHA Utilities and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHA Utilities and President Bakery 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 President Bakery Public 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 President Bakery i.e., President Bakery and WHA Utilities go up and down completely randomly.

Pair Corralation between President Bakery and WHA Utilities

Assuming the 90 days horizon President Bakery Public is expected to under-perform the WHA Utilities. But the stock apears to be less risky and, when comparing its historical volatility, President Bakery Public is 2.62 times less risky than WHA Utilities. The stock trades about 0.0 of its potential returns per unit of risk. The WHA Utilities and is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  462.00  in WHA Utilities and on September 28, 2024 and sell it today you would earn a total of  16.00  from holding WHA Utilities and or generate 3.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

President Bakery Public  vs.  WHA Utilities and

President Bakery Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days President Bakery Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, President Bakery is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

WHA Utilities

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Utilities and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, WHA Utilities is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with President Bakery and WHA Utilities

The main advantage of trading using opposite President Bakery and WHA Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Bakery 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 President Bakery Public 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.