Correlation Between WHA Premium and Impact Growth

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

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

Diversification Opportunities for WHA Premium and Impact Growth

0.81

Correlation Coefficient

WHA Premium  Impact Growth

Very poor diversification

The 3 months correlation between WHA and Impact is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding WHA Premium Growth and Impact Growth REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impact Growth REIT and WHA Premium 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 Premium Growth are associated (or correlated) with Impact Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impact Growth REIT has no effect on the direction of WHA Premium i.e., WHA Premium and Impact Growth go up and down completely randomly.

Pair Corralation between WHA Premium and Impact Growth

Assuming the 90 days trading horizon WHA Premium Growth is expected to generate 0.91 times more return on investment than Impact Growth. However, WHA Premium Growth is 1.09 times less risky than Impact Growth. It trades about -0.02 of its potential returns per unit of risk. Impact Growth REIT is currently generating about -0.1 per unit of risk. If you would invest  1,020  in WHA Premium Growth on September 4, 2024 and sell it today you would lose (20.00) from holding WHA Premium Growth or give up 1.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

WHA Premium Growth  vs.  Impact Growth REIT

WHA Premium Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Impact Growth REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impact Growth REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with WHA Premium and Impact Growth

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

The idea behind WHA Premium Growth and Impact Growth REIT 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.