Correlation Between Weichai Power and Nordson
Can any of the company-specific risk be diversified away by investing in both Weichai Power and Nordson 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 Weichai Power and Nordson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weichai Power Co and Nordson, you can compare the effects of market volatilities on Weichai Power and Nordson 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 Weichai Power with a short position of Nordson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Power and Nordson.
Diversification Opportunities for Weichai Power and Nordson
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Weichai and Nordson is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Power Co and Nordson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordson and Weichai Power 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 Weichai Power Co are associated (or correlated) with Nordson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordson has no effect on the direction of Weichai Power i.e., Weichai Power and Nordson go up and down completely randomly.
Pair Corralation between Weichai Power and Nordson
If you would invest 25,037 in Nordson on August 28, 2024 and sell it today you would earn a total of 1,325 from holding Nordson or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Weichai Power Co vs. Nordson
Performance |
| Timeline |
| Weichai Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Nordson |
Weichai Power and Nordson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Power and Nordson
The main advantage of trading using opposite Weichai Power and Nordson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Power position performs unexpectedly, Nordson 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 Nordson will offset losses from the drop in Nordson's long position.| Weichai Power vs. Xinjiang Goldwind Science | Weichai Power vs. Shanghai Electric Group | Weichai Power vs. American Superconductor | Weichai Power vs. Cummins |
| Nordson vs. Aquagold International | Nordson vs. Morningstar Unconstrained Allocation | Nordson vs. High Yield Municipal Fund | Nordson vs. Thrivent High Yield |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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