Correlation Between China Clean and WE Source
Can any of the company-specific risk be diversified away by investing in both China Clean and WE Source 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 China Clean and WE Source into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Clean Energy and WE Source Corp, you can compare the effects of market volatilities on China Clean and WE Source 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 China Clean with a short position of WE Source. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Clean and WE Source.
Diversification Opportunities for China Clean and WE Source
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between China and WESC is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding China Clean Energy and WE Source Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WE Source Corp and China Clean 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 China Clean Energy are associated (or correlated) with WE Source. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WE Source Corp has no effect on the direction of China Clean i.e., China Clean and WE Source go up and down completely randomly.
Pair Corralation between China Clean and WE Source
If you would invest 1.50 in WE Source Corp on September 2, 2024 and sell it today you would earn a total of 0.00 from holding WE Source Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Clean Energy vs. WE Source Corp
Performance |
| Timeline |
| China Clean Energy |
| WE Source Corp |
China Clean and WE Source Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Clean and WE Source
The main advantage of trading using opposite China Clean and WE Source positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Clean position performs unexpectedly, WE Source 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 WE Source will offset losses from the drop in WE Source's long position.| China Clean vs. Sherwin Williams Co | China Clean vs. Air Liquide SA | China Clean vs. Air Products and | China Clean vs. Ecolab Inc |
| WE Source vs. Omni Health | WE Source vs. Palomar Holdings | WE Source vs. Citizens | WE Source vs. Aspen Insurance Holdings |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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