Correlation Between Wattanapat Hospital and Home Depot

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

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

Diversification Opportunities for Wattanapat Hospital and Home Depot

-0.09

Correlation Coefficient

Wattanapat Hospital  Home Depot

Good diversification

The 3 months correlation between Wattanapat and Home is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Wattanapat Hospital Trang and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Wattanapat Hospital 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 Wattanapat Hospital Trang are associated (or correlated) with Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of Wattanapat Hospital i.e., Wattanapat Hospital and Home Depot go up and down completely randomly.

Pair Corralation between Wattanapat Hospital and Home Depot

Assuming the 90 days trading horizon Wattanapat Hospital Trang is expected to generate 2.32 times more return on investment than Home Depot. However, Wattanapat Hospital is 2.32 times more volatile than Home Depot. It trades about 0.13 of its potential returns per unit of risk. Home Depot is currently generating about -0.42 per unit of risk. If you would invest  850.00  in Wattanapat Hospital Trang on January 30, 2024 and sell it today you would earn a total of  40.00  from holding Wattanapat Hospital Trang or generate 4.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.27%
Values	Daily Returns

Wattanapat Hospital Trang  vs.  Home Depot

Wattanapat Hospital Trang

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wattanapat Hospital Trang are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical indicators, Wattanapat Hospital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Home Depot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home Depot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Home Depot is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Wattanapat Hospital and Home Depot

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

The idea behind Wattanapat Hospital Trang and Home Depot 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.