Correlation Between WHA Industrial and Thai Energy

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

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

Diversification Opportunities for WHA Industrial and Thai Energy

0.72

Correlation Coefficient

WHA Industrial  Thai Energy

Poor diversification

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

Pair Corralation between WHA Industrial and Thai Energy

Assuming the 90 days trading horizon WHA Industrial Leasehold is expected to generate 3.35 times more return on investment than Thai Energy. However, WHA Industrial is 3.35 times more volatile than Thai Energy Storage. It trades about 0.14 of its potential returns per unit of risk. Thai Energy Storage is currently generating about 0.0 per unit of risk. If you would invest  602.00  in WHA Industrial Leasehold on September 15, 2024 and sell it today you would earn a total of  58.00  from holding WHA Industrial Leasehold or generate 9.63% return on investment over 90 days.

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

WHA Industrial Leasehold  vs.  Thai Energy Storage

WHA Industrial Leasehold

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Industrial Leasehold are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, WHA Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Thai Energy Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Energy Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Thai Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WHA Industrial and Thai Energy

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

The idea behind WHA Industrial Leasehold and Thai Energy Storage 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.