Correlation Between Itau Unibanco and Wattanapat Hospital

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

By analyzing existing cross correlation between Itau Unibanco Banco and Wattanapat Hospital Trang, you can compare the effects of market volatilities on Itau Unibanco and Wattanapat Hospital 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 Itau Unibanco with a short position of Wattanapat Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Unibanco and Wattanapat Hospital.

Diversification Opportunities for Itau Unibanco and Wattanapat Hospital

0.08

Correlation Coefficient

Itau Unibanco  Wattanapat Hospital

Significant diversification

The 3 months correlation between Itau and Wattanapat is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Itau Unibanco Banco and Wattanapat Hospital Trang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wattanapat Hospital Trang and Itau Unibanco 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 Itau Unibanco Banco are associated (or correlated) with Wattanapat Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wattanapat Hospital Trang has no effect on the direction of Itau Unibanco i.e., Itau Unibanco and Wattanapat Hospital go up and down completely randomly.

Pair Corralation between Itau Unibanco and Wattanapat Hospital

Given the investment horizon of 90 days Itau Unibanco Banco is expected to under-perform the Wattanapat Hospital. But the stock apears to be less risky and, when comparing its historical volatility, Itau Unibanco Banco is 1.45 times less risky than Wattanapat Hospital. The stock trades about -0.34 of its potential returns per unit of risk. The Wattanapat Hospital Trang is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  820.00  in Wattanapat Hospital Trang on January 20, 2024 and sell it today you would earn a total of  20.00  from holding Wattanapat Hospital Trang or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.61%
Values	Daily Returns

Itau Unibanco Banco  vs.  Wattanapat Hospital Trang

Itau Unibanco Banco

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wattanapat Hospital Trang

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wattanapat Hospital Trang are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical indicators, Wattanapat Hospital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Itau Unibanco and Wattanapat Hospital

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

The idea behind Itau Unibanco Banco and Wattanapat Hospital Trang 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.