Correlation Between WHA Public and MBK Public

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

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

Diversification Opportunities for WHA Public and MBK Public

0.72

Correlation Coefficient

WHA Public  MBK Public

Poor diversification

The 3 months correlation between WHA and MBK is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding WHA Public and MBK Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBK Public 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 MBK Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBK Public has no effect on the direction of WHA Public i.e., WHA Public and MBK Public go up and down completely randomly.

Pair Corralation between WHA Public and MBK Public

Assuming the 90 days trading horizon WHA Public is expected to generate 0.94 times more return on investment than MBK Public. However, WHA Public is 1.06 times less risky than MBK Public. It trades about 0.06 of its potential returns per unit of risk. MBK Public is currently generating about 0.04 per unit of risk. If you would invest  361.00  in WHA Public on September 13, 2024 and sell it today you would earn a total of  209.00  from holding WHA Public or generate 57.89% return on investment over 90 days.

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

WHA Public  vs.  MBK Public

WHA Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, WHA Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

MBK Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MBK Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, MBK Public may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with WHA Public and MBK Public

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

The idea behind WHA Public and MBK Public 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.