Correlation Between Exxon and Wattanapat Hospital

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Can any of the company-specific risk be diversified away by investing in both Exxon 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 Exxon and Wattanapat Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxon Mobil Corp and Wattanapat Hospital Trang, you can compare the effects of market volatilities on Exxon 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 Exxon with a short position of Wattanapat Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Wattanapat Hospital.

Diversification Opportunities for Exxon and Wattanapat Hospital

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Exxon and Wattanapat is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp 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 Exxon 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 Exxon Mobil Corp 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 Exxon i.e., Exxon and Wattanapat Hospital go up and down completely randomly.

Pair Corralation between Exxon and Wattanapat Hospital

Considering the 90-day investment horizon Exxon is expected to generate 1.88 times less return on investment than Wattanapat Hospital. But when comparing it to its historical volatility, Exxon Mobil Corp is 5.27 times less risky than Wattanapat Hospital. It trades about 0.64 of its potential returns per unit of risk. Wattanapat Hospital Trang is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  696.00  in Wattanapat Hospital Trang on December 30, 2023 and sell it today you would earn a total of  144.00  from holding Wattanapat Hospital Trang or generate 20.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Exxon Mobil Corp  vs.  Wattanapat Hospital Trang

 Performance 
       Timeline  
Exxon Mobil Corp 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Exxon displayed solid returns over the last few months and may actually be approaching a breakup point.
Wattanapat Hospital Trang 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Wattanapat Hospital Trang are ranked lower than 9 (%) 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.

Exxon and Wattanapat Hospital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Exxon and Wattanapat Hospital

The main advantage of trading using opposite Exxon and Wattanapat Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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 Exxon Mobil Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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