Correlation Between Weichai Power and SMC Corp
Can any of the company-specific risk be diversified away by investing in both Weichai Power and SMC Corp 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 SMC Corp 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 SMC Corp Japan, you can compare the effects of market volatilities on Weichai Power and SMC Corp 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 SMC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Power and SMC Corp.
Diversification Opportunities for Weichai Power and SMC Corp
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Weichai and SMC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Power Co and SMC Corp Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Corp Japan 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 SMC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Corp Japan has no effect on the direction of Weichai Power i.e., Weichai Power and SMC Corp go up and down completely randomly.
Pair Corralation between Weichai Power and SMC Corp
If you would invest (100.00) in Weichai Power Co on November 27, 2024 and sell it today you would earn a total of 100.00 from holding Weichai Power Co or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Weichai Power Co vs. SMC Corp Japan
Performance |
| Timeline |
| Weichai Power |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| SMC Corp Japan |
Weichai Power and SMC Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Power and SMC Corp
The main advantage of trading using opposite Weichai Power and SMC Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Power position performs unexpectedly, SMC Corp 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 SMC Corp will offset losses from the drop in SMC Corp's long position.| Weichai Power vs. Xinjiang Goldwind Science | Weichai Power vs. Shanghai Electric Group | Weichai Power vs. American Superconductor | Weichai Power vs. Cummins |
| SMC Corp vs. Schneider Electric SE | SMC Corp vs. Atlas Copco AB | SMC Corp vs. Fanuc | SMC Corp vs. Sandvik 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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