Correlation Between Westinghouse Air and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and CHINA EDUCATION 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 Westinghouse Air and CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westinghouse Air Brake and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on Westinghouse Air and CHINA EDUCATION 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 Westinghouse Air with a short position of CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and CHINA EDUCATION.
Diversification Opportunities for Westinghouse Air and CHINA EDUCATION
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Westinghouse and CHINA is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP and Westinghouse Air 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 Westinghouse Air Brake are associated (or correlated) with CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between Westinghouse Air and CHINA EDUCATION
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.41 times more return on investment than CHINA EDUCATION. However, Westinghouse Air Brake is 2.42 times less risky than CHINA EDUCATION. It trades about 0.2 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about -0.24 per unit of risk. If you would invest 17,591 in Westinghouse Air Brake on August 29, 2024 and sell it today you would earn a total of 1,444 from holding Westinghouse Air Brake or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| Westinghouse Air Brake |
| CHINA EDUCATION GROUP |
Westinghouse Air and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and CHINA EDUCATION
The main advantage of trading using opposite Westinghouse Air and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, CHINA EDUCATION 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 CHINA EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| Westinghouse Air vs. ScanSource | Westinghouse Air vs. Marie Brizard Wine | Westinghouse Air vs. China Resources Beer | Westinghouse Air vs. Chunghwa Telecom Co |
| CHINA EDUCATION vs. Choice Hotels International | CHINA EDUCATION vs. Wyndham Hotels Resorts | CHINA EDUCATION vs. FIREWEED METALS P | CHINA EDUCATION vs. PARKEN Sport Entertainment |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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