Correlation Between Weichai Power and Vestas Wind
Can any of the company-specific risk be diversified away by investing in both Weichai Power and Vestas Wind 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 Vestas Wind 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 Vestas Wind Systems, you can compare the effects of market volatilities on Weichai Power and Vestas Wind 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 Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Power and Vestas Wind.
Diversification Opportunities for Weichai Power and Vestas Wind
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weichai and Vestas is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Power Co and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems 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 Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of Weichai Power i.e., Weichai Power and Vestas Wind go up and down completely randomly.
Pair Corralation between Weichai Power and Vestas Wind
If you would invest 161.00 in Weichai Power Co on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Weichai Power Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Weichai Power Co vs. Vestas Wind Systems
Performance |
| Timeline |
| Weichai Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Vestas Wind Systems |
Weichai Power and Vestas Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Power and Vestas Wind
The main advantage of trading using opposite Weichai Power and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Power position performs unexpectedly, Vestas Wind 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 Vestas Wind will offset losses from the drop in Vestas Wind's long position.| Weichai Power vs. Xinjiang Goldwind Science | Weichai Power vs. Shanghai Electric Group | Weichai Power vs. American Superconductor | Weichai Power vs. Cummins |
| Vestas Wind vs. GE Aerospace | Vestas Wind vs. Eaton PLC | Vestas Wind vs. Siemens AG Class | Vestas Wind 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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