Correlation Between Vestas Wind and Shanghai Electric
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Shanghai Electric 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 Shanghai Electric 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 Shanghai Electric Group, you can compare the effects of market volatilities on Vestas Wind and Shanghai Electric 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 Shanghai Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Shanghai Electric.
Diversification Opportunities for Vestas Wind and Shanghai Electric
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vestas and Shanghai is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Shanghai Electric Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Electric 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 Shanghai Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Electric has no effect on the direction of Vestas Wind i.e., Vestas Wind and Shanghai Electric go up and down completely randomly.
Pair Corralation between Vestas Wind and Shanghai Electric
Assuming the 90 days horizon Vestas Wind Systems is expected to under-perform the Shanghai Electric. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vestas Wind Systems is 2.94 times less risky than Shanghai Electric. The pink sheet trades about -0.2 of its potential returns per unit of risk. The Shanghai Electric Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestas Wind Systems vs. Shanghai Electric Group
Performance |
| Timeline |
| Vestas Wind Systems |
| Shanghai Electric |
Vestas Wind and Shanghai Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Shanghai Electric
The main advantage of trading using opposite Vestas Wind and Shanghai Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Shanghai Electric 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 Shanghai Electric will offset losses from the drop in Shanghai Electric's long position.| Vestas Wind vs. GE Aerospace | Vestas Wind vs. Eaton PLC | Vestas Wind vs. Siemens AG Class | Vestas Wind vs. Parker Hannifin |
| Shanghai Electric vs. Xinjiang Goldwind Science | Shanghai Electric vs. American Superconductor | Shanghai Electric 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |