Correlation Between WPP PLC and Haoxi Health

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

By analyzing existing cross correlation between WPP PLC ADR and Haoxi Health Technology, you can compare the effects of market volatilities on WPP PLC and Haoxi Health 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 WPP PLC with a short position of Haoxi Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPP PLC and Haoxi Health.

Diversification Opportunities for WPP PLC and Haoxi Health

-0.77

Correlation Coefficient

WPP PLC  Haoxi Health

Pay attention - limited upside

The 3 months correlation between WPP and Haoxi is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding WPP PLC ADR and Haoxi Health Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haoxi Health Technology and WPP PLC 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 WPP PLC ADR are associated (or correlated) with Haoxi Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haoxi Health Technology has no effect on the direction of WPP PLC i.e., WPP PLC and Haoxi Health go up and down completely randomly.

Pair Corralation between WPP PLC and Haoxi Health

Considering the 90-day investment horizon WPP PLC ADR is expected to generate 0.12 times more return on investment than Haoxi Health. However, WPP PLC ADR is 8.53 times less risky than Haoxi Health. It trades about 0.14 of its potential returns per unit of risk. Haoxi Health Technology is currently generating about -0.25 per unit of risk. If you would invest  4,686  in WPP PLC ADR on August 30, 2024 and sell it today you would earn a total of  685.00  from holding WPP PLC ADR or generate 14.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

WPP PLC ADR  vs.  Haoxi Health Technology

WPP PLC ADR

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WPP PLC ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, WPP PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Haoxi Health Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haoxi Health Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with WPP PLC and Haoxi Health

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

The idea behind WPP PLC ADR and Haoxi Health Technology 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.