Correlation Between Schneider Electric and Shanghai Electric
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and Shanghai Electric 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 Schneider Electric and Shanghai Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schneider Electric SE and Shanghai Electric Group, you can compare the effects of market volatilities on Schneider Electric and Shanghai Electric 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 Schneider Electric with a short position of Shanghai Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and Shanghai Electric.
Diversification Opportunities for Schneider Electric and Shanghai Electric
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Schneider and Shanghai is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and Shanghai Electric Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Electric and Schneider Electric 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 Schneider Electric SE are associated (or correlated) with Shanghai Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Electric has no effect on the direction of Schneider Electric i.e., Schneider Electric and Shanghai Electric go up and down completely randomly.
Pair Corralation between Schneider Electric and Shanghai Electric
Assuming the 90 days horizon Schneider Electric is expected to generate 1.27 times less return on investment than Shanghai Electric. But when comparing it to its historical volatility, Schneider Electric SE is 2.22 times less risky than Shanghai Electric. It trades about 0.07 of its potential returns per unit of risk. Shanghai Electric Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 465.00 in Shanghai Electric Group on August 29, 2024 and sell it today you would earn a total of 298.00 from holding Shanghai Electric Group or generate 64.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schneider Electric SE vs. Shanghai Electric Group
Performance |
| Timeline |
| Schneider Electric |
| Shanghai Electric |
Schneider Electric and Shanghai Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider Electric and Shanghai Electric
The main advantage of trading using opposite Schneider Electric and Shanghai Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, Shanghai Electric 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 Shanghai Electric will offset losses from the drop in Shanghai Electric's long position.| Schneider Electric vs. SMC Corp Japan | Schneider Electric vs. Atlas Copco AB | Schneider Electric vs. Fanuc | Schneider Electric vs. Ebara Corp ADR |
| Shanghai Electric vs. Parker Hannifin | Shanghai Electric vs. Eaton PLC | Shanghai Electric vs. Dover | Shanghai Electric vs. Illinois Tool Works |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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