Correlation Between Vestas Wind and Xinjiang Goldwind
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Xinjiang Goldwind 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 Vestas Wind and Xinjiang Goldwind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestas Wind Systems and Xinjiang Goldwind Science, you can compare the effects of market volatilities on Vestas Wind and Xinjiang Goldwind 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 Vestas Wind with a short position of Xinjiang Goldwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Xinjiang Goldwind.
Diversification Opportunities for Vestas Wind and Xinjiang Goldwind
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vestas and Xinjiang is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Xinjiang Goldwind Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Goldwind Science and Vestas Wind 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 Vestas Wind Systems are associated (or correlated) with Xinjiang Goldwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Goldwind Science has no effect on the direction of Vestas Wind i.e., Vestas Wind and Xinjiang Goldwind go up and down completely randomly.
Pair Corralation between Vestas Wind and Xinjiang Goldwind
Assuming the 90 days horizon Vestas Wind Systems is expected to under-perform the Xinjiang Goldwind. In addition to that, Vestas Wind is 1.88 times more volatile than Xinjiang Goldwind Science. It trades about -0.24 of its total potential returns per unit of risk. Xinjiang Goldwind Science is currently generating about -0.09 per unit of volatility. If you would invest 84.00 in Xinjiang Goldwind Science on September 1, 2024 and sell it today you would lose (4.00) from holding Xinjiang Goldwind Science or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestas Wind Systems vs. Xinjiang Goldwind Science
Performance |
| Timeline |
| Vestas Wind Systems |
| Xinjiang Goldwind Science |
Vestas Wind and Xinjiang Goldwind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Xinjiang Goldwind
The main advantage of trading using opposite Vestas Wind and Xinjiang Goldwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Xinjiang Goldwind 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 Xinjiang Goldwind will offset losses from the drop in Xinjiang Goldwind's long position.| Vestas Wind vs. Kone Oyj ADR | Vestas Wind vs. Schneider Electric SE | Vestas Wind vs. Schneider Electric SA | Vestas Wind vs. Fanuc |
| Xinjiang Goldwind vs. Shanghai Electric Group | Xinjiang Goldwind vs. American Superconductor | Xinjiang Goldwind vs. Cummins |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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