Correlation Between Western Digital and Jiangsu Expressway
Can any of the company-specific risk be diversified away by investing in both Western Digital and Jiangsu Expressway 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 Western Digital and Jiangsu Expressway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and Jiangsu Expressway Co, you can compare the effects of market volatilities on Western Digital and Jiangsu Expressway 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 Western Digital with a short position of Jiangsu Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Jiangsu Expressway.
Diversification Opportunities for Western Digital and Jiangsu Expressway
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Jiangsu is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Jiangsu Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Expressway and Western Digital 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 Western Digital are associated (or correlated) with Jiangsu Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Expressway has no effect on the direction of Western Digital i.e., Western Digital and Jiangsu Expressway go up and down completely randomly.
Pair Corralation between Western Digital and Jiangsu Expressway
Considering the 90-day investment horizon Western Digital is expected to generate 1.28 times less return on investment than Jiangsu Expressway. But when comparing it to its historical volatility, Western Digital is 1.46 times less risky than Jiangsu Expressway. It trades about 0.06 of its potential returns per unit of risk. Jiangsu Expressway Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,000 in Jiangsu Expressway Co on August 30, 2024 and sell it today you would earn a total of 100.00 from holding Jiangsu Expressway Co or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Digital vs. Jiangsu Expressway Co
Performance |
| Timeline |
| Western Digital |
| Jiangsu Expressway |
Western Digital and Jiangsu Expressway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and Jiangsu Expressway
The main advantage of trading using opposite Western Digital and Jiangsu Expressway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, Jiangsu Expressway 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 Jiangsu Expressway will offset losses from the drop in Jiangsu Expressway's long position.| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
| Jiangsu Expressway vs. Verra Mobility Corp | Jiangsu Expressway vs. HUMANA INC | Jiangsu Expressway vs. Aquagold International | Jiangsu Expressway vs. Barloworld Ltd ADR |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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