Correlation Between Weichai Power and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both Weichai Power and Schneider Electric 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 Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weichai Power and Schneider Electric SA, you can compare the effects of market volatilities on Weichai Power and Schneider Electric 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 Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Power and Schneider Electric.
Diversification Opportunities for Weichai Power and Schneider Electric
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Weichai and Schneider is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Power and Schneider Electric SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric 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 Schneider Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schneider Electric has no effect on the direction of Weichai Power i.e., Weichai Power and Schneider Electric go up and down completely randomly.
Pair Corralation between Weichai Power and Schneider Electric
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 | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Weichai Power vs. Schneider Electric SA
Performance |
| Timeline |
| Weichai Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Schneider Electric |
Weichai Power and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Power and Schneider Electric
The main advantage of trading using opposite Weichai Power and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Power position performs unexpectedly, Schneider Electric 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 Schneider Electric will offset losses from the drop in Schneider Electric's long position.| Weichai Power vs. Shanghai Electric Group | Weichai Power vs. Xinjiang Goldwind Science | Weichai Power vs. Nordson | Weichai Power vs. CVD Equipment |
| Schneider Electric vs. GE Aerospace | Schneider Electric vs. Eaton PLC | Schneider Electric vs. Siemens AG Class | Schneider Electric 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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