Correlation Between Westinghouse Air and Xinhua Winshare
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Xinhua Winshare 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 Xinhua Winshare 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 Xinhua Winshare Publishing, you can compare the effects of market volatilities on Westinghouse Air and Xinhua Winshare 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 Xinhua Winshare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Xinhua Winshare.
Diversification Opportunities for Westinghouse Air and Xinhua Winshare
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Westinghouse and Xinhua is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Xinhua Winshare Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinhua Winshare Publ 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 Xinhua Winshare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinhua Winshare Publ has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Xinhua Winshare go up and down completely randomly.
Pair Corralation between Westinghouse Air and Xinhua Winshare
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 1.0 times more return on investment than Xinhua Winshare. However, Westinghouse Air is 1.0 times more volatile than Xinhua Winshare Publishing. It trades about 0.19 of its potential returns per unit of risk. Xinhua Winshare Publishing is currently generating about -0.17 per unit of risk. If you would invest 17,262 in Westinghouse Air Brake on August 25, 2024 and sell it today you would earn a total of 1,233 from holding Westinghouse Air Brake or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Xinhua Winshare Publishing
Performance |
| Timeline |
| Westinghouse Air Brake |
| Xinhua Winshare Publ |
Westinghouse Air and Xinhua Winshare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Xinhua Winshare
The main advantage of trading using opposite Westinghouse Air and Xinhua Winshare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Xinhua Winshare 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 Xinhua Winshare will offset losses from the drop in Xinhua Winshare's long position.| Westinghouse Air vs. Chunghwa Telecom Co | Westinghouse Air vs. Consolidated Communications Holdings | Westinghouse Air vs. Singapore Telecommunications Limited | Westinghouse Air vs. Rogers Communications |
| Xinhua Winshare vs. Superior Plus Corp | Xinhua Winshare vs. NMI Holdings | Xinhua Winshare vs. Origin Agritech | Xinhua Winshare vs. SIVERS SEMICONDUCTORS AB |
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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