Correlation Between Shanghai Electric and Aumann AG
Can any of the company-specific risk be diversified away by investing in both Shanghai Electric and Aumann AG 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 Shanghai Electric and Aumann AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shanghai Electric Group and Aumann AG, you can compare the effects of market volatilities on Shanghai Electric and Aumann AG 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 Shanghai Electric with a short position of Aumann AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Electric and Aumann AG.
Diversification Opportunities for Shanghai Electric and Aumann AG
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shanghai and Aumann is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Electric Group and Aumann AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aumann AG and Shanghai 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 Shanghai Electric Group are associated (or correlated) with Aumann AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aumann AG has no effect on the direction of Shanghai Electric i.e., Shanghai Electric and Aumann AG go up and down completely randomly.
Pair Corralation between Shanghai Electric and Aumann AG
Assuming the 90 days horizon Shanghai Electric Group is expected to generate 4.32 times more return on investment than Aumann AG. However, Shanghai Electric is 4.32 times more volatile than Aumann AG. It trades about 0.09 of its potential returns per unit of risk. Aumann AG is currently generating about -0.16 per unit of risk. If you would invest 405.00 in Shanghai Electric Group on August 29, 2024 and sell it today you would earn a total of 358.00 from holding Shanghai Electric Group or generate 88.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Electric Group vs. Aumann AG
Performance |
| Timeline |
| Shanghai Electric |
| Aumann AG |
Shanghai Electric and Aumann AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Electric and Aumann AG
The main advantage of trading using opposite Shanghai Electric and Aumann AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Electric position performs unexpectedly, Aumann AG 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 Aumann AG will offset losses from the drop in Aumann AG's long position.| Shanghai Electric vs. Parker Hannifin | Shanghai Electric vs. Eaton PLC | Shanghai Electric vs. Dover | Shanghai Electric vs. Illinois Tool Works |
| Aumann AG vs. Parker Hannifin | Aumann AG vs. Eaton PLC | Aumann AG vs. Dover | Aumann AG 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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