Correlation Between Weir Group and Dear Cashmere
Can any of the company-specific risk be diversified away by investing in both Weir Group and Dear Cashmere 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 Weir Group and Dear Cashmere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weir Group PLC and Dear Cashmere Holding, you can compare the effects of market volatilities on Weir Group and Dear Cashmere 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 Weir Group with a short position of Dear Cashmere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weir Group and Dear Cashmere.
Diversification Opportunities for Weir Group and Dear Cashmere
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weir and Dear is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Weir Group PLC and Dear Cashmere Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dear Cashmere Holding and Weir Group 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 Weir Group PLC are associated (or correlated) with Dear Cashmere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dear Cashmere Holding has no effect on the direction of Weir Group i.e., Weir Group and Dear Cashmere go up and down completely randomly.
Pair Corralation between Weir Group and Dear Cashmere
Assuming the 90 days horizon Weir Group is expected to generate 11.83 times less return on investment than Dear Cashmere. But when comparing it to its historical volatility, Weir Group PLC is 6.81 times less risky than Dear Cashmere. It trades about 0.05 of its potential returns per unit of risk. Dear Cashmere Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6.90 in Dear Cashmere Holding on September 4, 2024 and sell it today you would earn a total of 10.10 from holding Dear Cashmere Holding or generate 146.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.78% |
| Values | Daily Returns |
Weir Group PLC vs. Dear Cashmere Holding
Performance |
| Timeline |
| Weir Group PLC |
| Dear Cashmere Holding |
Weir Group and Dear Cashmere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weir Group and Dear Cashmere
The main advantage of trading using opposite Weir Group and Dear Cashmere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weir Group position performs unexpectedly, Dear Cashmere 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 Dear Cashmere will offset losses from the drop in Dear Cashmere's long position.| Weir Group vs. Dear Cashmere Holding | Weir Group vs. Goff Corp | Weir Group vs. Wialan Technologies | Weir Group vs. Cgrowth Capital |
| Dear Cashmere vs. Salesforce | Dear Cashmere vs. SAP SE ADR | Dear Cashmere vs. ServiceNow | Dear Cashmere vs. Intuit Inc |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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