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 SA 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
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Schneider and THK is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SA 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 SA 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 SA is expected to under-perform the THK Co. But the pink sheet apears to be less risky and, when comparing its historical volatility, Schneider Electric SA is 3.49 times less risky than THK Co. The pink sheet trades about -0.04 of its potential returns per unit of risk. The THK Co Ltd is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 854.00 in THK Co Ltd on September 12, 2024 and sell it today you would earn a total of 326.00 from holding THK Co Ltd or generate 38.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schneider Electric SA 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. Xinjiang Goldwind Science | Schneider Electric vs. American Superconductor | Schneider Electric vs. Cummins | Schneider Electric vs. Aquagold International |
| THK Co vs. Xinjiang Goldwind Science | THK Co vs. American Superconductor | THK Co vs. Cummins | THK Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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