Correlation Between Weichai Power and Nordex SE
Can any of the company-specific risk be diversified away by investing in both Weichai Power and Nordex SE 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 Nordex SE 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 Nordex SE, you can compare the effects of market volatilities on Weichai Power and Nordex SE 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 Nordex SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Power and Nordex SE.
Diversification Opportunities for Weichai Power and Nordex SE
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Weichai and Nordex is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Power Co and Nordex SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordex SE 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 Nordex SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordex SE has no effect on the direction of Weichai Power i.e., Weichai Power and Nordex SE go up and down completely randomly.
Pair Corralation between Weichai Power and Nordex SE
If you would invest 1,423 in Nordex SE on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Nordex SE or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Weichai Power Co vs. Nordex SE
Performance |
| Timeline |
| Weichai Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Nordex SE |
Weichai Power and Nordex SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Power and Nordex SE
The main advantage of trading using opposite Weichai Power and Nordex SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Power position performs unexpectedly, Nordex SE 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 Nordex SE will offset losses from the drop in Nordex SE's long position.| Weichai Power vs. Xinjiang Goldwind Science | Weichai Power vs. Shanghai Electric Group | Weichai Power vs. American Superconductor | Weichai Power vs. Cummins |
| Nordex SE vs. GE Aerospace | Nordex SE vs. Eaton PLC | Nordex SE vs. Siemens AG Class | Nordex SE vs. Parker Hannifin |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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