Correlation Between THK Co and Weir Group
Can any of the company-specific risk be diversified away by investing in both THK Co and Weir Group 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 THK Co and Weir Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THK Co Ltd and Weir Group PLC, you can compare the effects of market volatilities on THK Co and Weir Group 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 THK Co with a short position of Weir Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of THK Co and Weir Group.
Diversification Opportunities for THK Co and Weir Group
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between THK and Weir is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding THK Co Ltd and Weir Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weir Group PLC and THK Co 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 THK Co Ltd are associated (or correlated) with Weir Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weir Group PLC has no effect on the direction of THK Co i.e., THK Co and Weir Group go up and down completely randomly.
Pair Corralation between THK Co and Weir Group
Assuming the 90 days horizon THK Co is expected to generate 1.14 times less return on investment than Weir Group. In addition to that, THK Co is 1.68 times more volatile than Weir Group PLC. It trades about 0.03 of its total potential returns per unit of risk. Weir Group PLC is currently generating about 0.05 per unit of volatility. If you would invest 1,257 in Weir Group PLC on September 3, 2024 and sell it today you would earn a total of 152.00 from holding Weir Group PLC or generate 12.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.65% |
| Values | Daily Returns |
THK Co Ltd vs. Weir Group PLC
Performance |
| Timeline |
| THK Co |
| Weir Group PLC |
THK Co and Weir Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THK Co and Weir Group
The main advantage of trading using opposite THK Co and Weir Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THK Co position performs unexpectedly, Weir Group 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 Weir Group will offset losses from the drop in Weir Group's long position.| THK Co vs. Dear Cashmere Holding | THK Co vs. Goff Corp | THK Co vs. Wialan Technologies | THK Co vs. Cgrowth Capital |
| Weir Group vs. Dear Cashmere Holding | Weir Group vs. Goff Corp | Weir Group vs. Wialan Technologies | Weir Group vs. Cgrowth Capital |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |