Correlation Between Kawasaki Heavy and Xinjiang Goldwind
Can any of the company-specific risk be diversified away by investing in both Kawasaki Heavy and Xinjiang Goldwind 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 Kawasaki Heavy and Xinjiang Goldwind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kawasaki Heavy Industries and Xinjiang Goldwind Science, you can compare the effects of market volatilities on Kawasaki Heavy and Xinjiang Goldwind 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 Kawasaki Heavy with a short position of Xinjiang Goldwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasaki Heavy and Xinjiang Goldwind.
Diversification Opportunities for Kawasaki Heavy and Xinjiang Goldwind
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kawasaki and Xinjiang is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kawasaki Heavy Industries and Xinjiang Goldwind Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Goldwind Science and Kawasaki Heavy 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 Kawasaki Heavy Industries are associated (or correlated) with Xinjiang Goldwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Goldwind Science has no effect on the direction of Kawasaki Heavy i.e., Kawasaki Heavy and Xinjiang Goldwind go up and down completely randomly.
Pair Corralation between Kawasaki Heavy and Xinjiang Goldwind
Assuming the 90 days horizon Kawasaki Heavy is expected to generate 1.41 times less return on investment than Xinjiang Goldwind. But when comparing it to its historical volatility, Kawasaki Heavy Industries is 2.04 times less risky than Xinjiang Goldwind. It trades about 0.05 of its potential returns per unit of risk. Xinjiang Goldwind Science is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 79.00 in Xinjiang Goldwind Science on September 12, 2024 and sell it today you would earn a total of 12.00 from holding Xinjiang Goldwind Science or generate 15.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 71.26% |
| Values | Daily Returns |
Kawasaki Heavy Industries vs. Xinjiang Goldwind Science
Performance |
| Timeline |
| Kawasaki Heavy Industries |
| Xinjiang Goldwind Science |
Kawasaki Heavy and Xinjiang Goldwind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kawasaki Heavy and Xinjiang Goldwind
The main advantage of trading using opposite Kawasaki Heavy and Xinjiang Goldwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawasaki Heavy position performs unexpectedly, Xinjiang Goldwind 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 Xinjiang Goldwind will offset losses from the drop in Xinjiang Goldwind's long position.| Kawasaki Heavy vs. Xinjiang Goldwind Science | Kawasaki Heavy vs. American Superconductor | Kawasaki Heavy vs. Cummins | Kawasaki Heavy vs. Aquagold International |
| Xinjiang Goldwind vs. Shanghai Electric Group | Xinjiang Goldwind vs. American Superconductor | Xinjiang Goldwind vs. Cummins | Xinjiang Goldwind vs. Aquagold International |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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