Correlation Between Shanghai Electric and Nidec
Can any of the company-specific risk be diversified away by investing in both Shanghai Electric and Nidec 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 Nidec 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 Nidec, you can compare the effects of market volatilities on Shanghai Electric and Nidec 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 Nidec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Electric and Nidec.
Diversification Opportunities for Shanghai Electric and Nidec
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shanghai and Nidec is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Electric Group and Nidec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidec 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 Nidec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidec has no effect on the direction of Shanghai Electric i.e., Shanghai Electric and Nidec go up and down completely randomly.
Pair Corralation between Shanghai Electric and Nidec
If you would invest 654.00 in Shanghai Electric Group on September 1, 2024 and sell it today you would earn a total of 56.00 from holding Shanghai Electric Group or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Shanghai Electric Group vs. Nidec
Performance |
| Timeline |
| Shanghai Electric |
| Nidec |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shanghai Electric and Nidec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Electric and Nidec
The main advantage of trading using opposite Shanghai Electric and Nidec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Electric position performs unexpectedly, Nidec 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 Nidec will offset losses from the drop in Nidec's long position.| Shanghai Electric vs. Xinjiang Goldwind Science | Shanghai Electric vs. American Superconductor | Shanghai Electric vs. Cummins |
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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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