Correlation Between VGI Public and WHA Utilities

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

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

Diversification Opportunities for VGI Public and WHA Utilities

-0.2

Correlation Coefficient

VGI Public  WHA Utilities

Good diversification

The 3 months correlation between VGI and WHA is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding VGI 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 VGI 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 VGI 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 VGI Public i.e., VGI Public and WHA Utilities go up and down completely randomly.

Pair Corralation between VGI Public and WHA Utilities

Assuming the 90 days trading horizon VGI Public is expected to generate 58.22 times more return on investment than WHA Utilities. However, VGI Public is 58.22 times more volatile than WHA Utilities and. It trades about 0.12 of its potential returns per unit of risk. WHA Utilities and is currently generating about 0.05 per unit of risk. If you would invest  286.00  in VGI Public on September 28, 2024 and sell it today you would earn a total of  46.00  from holding VGI Public or generate 16.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

VGI Public  vs.  WHA Utilities and

VGI Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VGI Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, VGI Public sustained solid returns over the last few months and may actually be approaching a breakup point.

WHA Utilities

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Utilities and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, WHA Utilities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VGI Public and WHA Utilities

The main advantage of trading using opposite VGI Public and WHA Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VGI Public 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 VGI 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.