Correlation Between Schneider Electric and THK Co
Can any of the company-specific risk be diversified away by investing in both Schneider Electric and THK Co 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 THK Co 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 THK Co Ltd, you can compare the effects of market volatilities on Schneider Electric and THK Co 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 THK Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and THK Co.
Diversification Opportunities for Schneider Electric and THK Co
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Schneider and THK is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and THK Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THK Co 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 THK Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THK Co has no effect on the direction of Schneider Electric i.e., Schneider Electric and THK Co go up and down completely randomly.
Pair Corralation between Schneider Electric and THK Co
Assuming the 90 days horizon Schneider Electric is expected to generate 33.21 times less return on investment than THK Co. But when comparing it to its historical volatility, Schneider Electric SE is 2.05 times less risky than THK Co. It trades about 0.03 of its potential returns per unit of risk. THK Co Ltd is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 830.00 in THK Co Ltd on September 4, 2024 and sell it today you would earn a total of 404.00 from holding THK Co Ltd or generate 48.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schneider Electric SE vs. THK Co Ltd
Performance |
| Timeline |
| Schneider Electric |
| THK Co |
Schneider Electric and THK Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider Electric and THK Co
The main advantage of trading using opposite Schneider Electric and THK Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, THK Co 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 THK Co will offset losses from the drop in THK Co's long position.| Schneider Electric vs. Dear Cashmere Holding | Schneider Electric vs. Goff Corp | Schneider Electric vs. Wialan Technologies | Schneider Electric vs. Cgrowth Capital |
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 Stocks Directory module to find actively traded stocks across global markets.
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