Correlation Between SMC Corp and Weichai Power
Can any of the company-specific risk be diversified away by investing in both SMC Corp and Weichai Power 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 SMC Corp and Weichai Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMC Corp Japan and Weichai Power, you can compare the effects of market volatilities on SMC Corp and Weichai Power 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 SMC Corp with a short position of Weichai Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMC Corp and Weichai Power.
Diversification Opportunities for SMC Corp and Weichai Power
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between SMC and Weichai is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SMC Corp Japan and Weichai Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weichai Power and SMC Corp 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 SMC Corp Japan are associated (or correlated) with Weichai Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weichai Power has no effect on the direction of SMC Corp i.e., SMC Corp and Weichai Power go up and down completely randomly.
Pair Corralation between SMC Corp and Weichai Power
If you would invest 2,114 in SMC Corp Japan on August 29, 2024 and sell it today you would earn a total of 54.00 from holding SMC Corp Japan or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
SMC Corp Japan vs. Weichai Power
Performance |
| Timeline |
| SMC Corp Japan |
| Weichai Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SMC Corp and Weichai Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMC Corp and Weichai Power
The main advantage of trading using opposite SMC Corp and Weichai Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMC Corp position performs unexpectedly, Weichai Power 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 Weichai Power will offset losses from the drop in Weichai Power's long position.| SMC Corp vs. Schneider Electric SE | SMC Corp vs. Atlas Copco AB | SMC Corp vs. Fanuc | SMC Corp vs. Sandvik AB |
| Weichai Power vs. Shanghai Electric Group | Weichai Power vs. Xinjiang Goldwind Science | Weichai Power vs. Nordson | Weichai Power vs. CVD Equipment |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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