Correlation Between Weichai Power and Weichai Power
Can any of the company-specific risk be diversified away by investing in both Weichai Power and Weichai Power 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 Weichai Power 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 Weichai Power, you can compare the effects of market volatilities on Weichai Power and Weichai Power 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 Weichai Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Power and Weichai Power.
Diversification Opportunities for Weichai Power and Weichai Power
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Weichai and Weichai is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Power Co and Weichai Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weichai Power 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 Weichai Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weichai Power has no effect on the direction of Weichai Power i.e., Weichai Power and Weichai Power go up and down completely randomly.
Pair Corralation between Weichai Power and Weichai Power
Assuming the 90 days horizon Weichai Power Co is expected to generate 1.4 times more return on investment than Weichai Power. However, Weichai Power is 1.4 times more volatile than Weichai Power. It trades about 0.03 of its potential returns per unit of risk. Weichai Power is currently generating about -0.01 per unit of risk. If you would invest 143.00 in Weichai Power Co on September 1, 2024 and sell it today you would earn a total of 18.00 from holding Weichai Power Co or generate 12.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 52.17% |
| Values | Daily Returns |
Weichai Power Co vs. Weichai Power
Performance |
| Timeline |
| Weichai Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Weichai Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Weichai Power and Weichai Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Power and Weichai Power
The main advantage of trading using opposite Weichai Power and Weichai Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Power position performs unexpectedly, Weichai Power 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 Weichai Power will offset losses from the drop in Weichai Power's long position.| Weichai Power vs. Xinjiang Goldwind Science | Weichai Power vs. Shanghai Electric Group | Weichai Power vs. American Superconductor | Weichai Power vs. Cummins |
| Weichai Power vs. Shanghai Electric Group | Weichai Power vs. Xinjiang Goldwind Science | Weichai Power vs. Nordson | Weichai Power vs. CVD Equipment |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |