Correlation Between Shanghai Electric and Rockwell Automation
Can any of the company-specific risk be diversified away by investing in both Shanghai Electric and Rockwell Automation 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 Rockwell Automation 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 Rockwell Automation, you can compare the effects of market volatilities on Shanghai Electric and Rockwell Automation 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 Rockwell Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Electric and Rockwell Automation.
Diversification Opportunities for Shanghai Electric and Rockwell Automation
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and Rockwell is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Electric Group and Rockwell Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Automation 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 Rockwell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Automation has no effect on the direction of Shanghai Electric i.e., Shanghai Electric and Rockwell Automation go up and down completely randomly.
Pair Corralation between Shanghai Electric and Rockwell Automation
Assuming the 90 days horizon Shanghai Electric Group is expected to generate 2.52 times more return on investment than Rockwell Automation. However, Shanghai Electric is 2.52 times more volatile than Rockwell Automation. It trades about 0.04 of its potential returns per unit of risk. Rockwell Automation is currently generating about 0.01 per unit of risk. If you would invest 502.00 in Shanghai Electric Group on September 2, 2024 and sell it today you would earn a total of 208.00 from holding Shanghai Electric Group or generate 41.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Shanghai Electric Group vs. Rockwell Automation
Performance |
| Timeline |
| Shanghai Electric |
| Rockwell Automation |
Shanghai Electric and Rockwell Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Electric and Rockwell Automation
The main advantage of trading using opposite Shanghai Electric and Rockwell Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Electric position performs unexpectedly, Rockwell Automation 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 Rockwell Automation will offset losses from the drop in Rockwell Automation's long position.| Shanghai Electric vs. Xinjiang Goldwind Science | Shanghai Electric vs. American Superconductor | Shanghai Electric vs. Cummins |
| Rockwell Automation vs. Dover | Rockwell Automation vs. Illinois Tool Works | Rockwell Automation vs. Ingersoll Rand | Rockwell Automation vs. Eaton PLC |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |