Correlation Between WHA Industrial and NAT ABSOLUTE

Can any of the company-specific risk be diversified away by investing in both WHA Industrial and NAT ABSOLUTE 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 NAT ABSOLUTE 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 NAT ABSOLUTE TECHNOLOGIES, you can compare the effects of market volatilities on WHA Industrial and NAT ABSOLUTE 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 NAT ABSOLUTE. Check out your portfolio center. Please also check ongoing floating volatility patterns of WHA Industrial and NAT ABSOLUTE.

Diversification Opportunities for WHA Industrial and NAT ABSOLUTE

-0.61

Correlation Coefficient

WHA Industrial  NAT ABSOLUTE

Excellent diversification

The 3 months correlation between WHA and NAT is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding WHA Industrial Leasehold and NAT ABSOLUTE TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAT ABSOLUTE TECHNOLOGIES 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 NAT ABSOLUTE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAT ABSOLUTE TECHNOLOGIES has no effect on the direction of WHA Industrial i.e., WHA Industrial and NAT ABSOLUTE go up and down completely randomly.

Pair Corralation between WHA Industrial and NAT ABSOLUTE

Assuming the 90 days trading horizon WHA Industrial Leasehold is expected to generate 0.31 times more return on investment than NAT ABSOLUTE. However, WHA Industrial Leasehold is 3.18 times less risky than NAT ABSOLUTE. It trades about 0.03 of its potential returns per unit of risk. NAT ABSOLUTE TECHNOLOGIES is currently generating about -0.03 per unit of risk. If you would invest  592.00  in WHA Industrial Leasehold on September 12, 2024 and sell it today you would earn a total of  53.00  from holding WHA Industrial Leasehold or generate 8.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	61.99%
Values	Daily Returns

WHA Industrial Leasehold  vs.  NAT ABSOLUTE TECHNOLOGIES

WHA Industrial Leasehold

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WHA Industrial Leasehold are ranked lower than 10 (%) 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.

NAT ABSOLUTE TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAT ABSOLUTE TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with WHA Industrial and NAT ABSOLUTE

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

The idea behind WHA Industrial Leasehold and NAT ABSOLUTE TECHNOLOGIES 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.