Correlation Between Weichai Power and Ebara Corp
Can any of the company-specific risk be diversified away by investing in both Weichai Power and Ebara 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 Ebara Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weichai Power and Ebara Corp ADR, you can compare the effects of market volatilities on Weichai Power and Ebara 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 Ebara Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Power and Ebara Corp.
Diversification Opportunities for Weichai Power and Ebara Corp
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Weichai and Ebara is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Power and Ebara Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebara Corp ADR 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 are associated (or correlated) with Ebara Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebara Corp ADR has no effect on the direction of Weichai Power i.e., Weichai Power and Ebara Corp go up and down completely randomly.
Pair Corralation between Weichai Power and Ebara Corp
If you would invest 1,126 in Weichai Power on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Weichai Power or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Weichai Power vs. Ebara Corp ADR
Performance |
| Timeline |
| Weichai Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ebara Corp ADR |
Weichai Power and Ebara Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Power and Ebara Corp
The main advantage of trading using opposite Weichai Power and Ebara Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Power position performs unexpectedly, Ebara 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 Ebara Corp will offset losses from the drop in Ebara Corp's long position.| Weichai Power vs. Shanghai Electric Group | Weichai Power vs. Xinjiang Goldwind Science | Weichai Power vs. Nordson | Weichai Power vs. CVD Equipment |
| Ebara Corp vs. Xinjiang Goldwind Science | Ebara Corp vs. Schneider Electric SE | Ebara Corp vs. Vestas Wind Systems |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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