Correlation Between WHA Public and CPN Retail

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

By analyzing existing cross correlation between WHA Public and CPN Retail Growth, you can compare the effects of market volatilities on WHA Public and CPN Retail 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 CPN Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of WHA Public and CPN Retail.

Diversification Opportunities for WHA Public and CPN Retail

-0.13

Correlation Coefficient

WHA Public  CPN Retail

Good diversification

The 3 months correlation between WHA and CPN is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding WHA Public and CPN Retail Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPN Retail Growth 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 CPN Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPN Retail Growth has no effect on the direction of WHA Public i.e., WHA Public and CPN Retail go up and down completely randomly.

Pair Corralation between WHA Public and CPN Retail

Assuming the 90 days trading horizon WHA Public is expected to generate 3.19 times less return on investment than CPN Retail. In addition to that, WHA Public is 1.41 times more volatile than CPN Retail Growth. It trades about 0.02 of its total potential returns per unit of risk. CPN Retail Growth is currently generating about 0.08 per unit of volatility. If you would invest  1,198  in CPN Retail Growth on September 5, 2024 and sell it today you would earn a total of  32.00  from holding CPN Retail Growth or generate 2.67% return on investment over 90 days.

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

WHA Public  vs.  CPN Retail Growth

WHA Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, WHA Public may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CPN Retail Growth

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CPN Retail Growth are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CPN Retail is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WHA Public and CPN Retail

The main advantage of trading using opposite WHA Public and CPN Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WHA Public position performs unexpectedly, CPN Retail 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 CPN Retail will offset losses from the drop in CPN Retail's long position.

The idea behind WHA Public and CPN Retail Growth 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.