Correlation Between Weichai Power and Shenzhou International
Can any of the company-specific risk be diversified away by investing in both Weichai Power and Shenzhou International 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 Shenzhou International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weichai Power and Shenzhou International Group, you can compare the effects of market volatilities on Weichai Power and Shenzhou International 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 Shenzhou International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Power and Shenzhou International.
Diversification Opportunities for Weichai Power and Shenzhou International
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Weichai and Shenzhou is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Power and Shenzhou International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhou International 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 Shenzhou International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhou International has no effect on the direction of Weichai Power i.e., Weichai Power and Shenzhou International go up and down completely randomly.
Pair Corralation between Weichai Power and Shenzhou International
If you would invest (100.00) in Weichai Power on November 9, 2024 and sell it today you would earn a total of 100.00 from holding Weichai Power 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 vs. Shenzhou International Group
Performance |
| Timeline |
| Weichai Power |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Shenzhou International |
Risk-Adjusted Performance
Insignificant
Weak | Strong |
Weichai Power and Shenzhou International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Power and Shenzhou International
The main advantage of trading using opposite Weichai Power and Shenzhou International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Power position performs unexpectedly, Shenzhou International 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 Shenzhou International will offset losses from the drop in Shenzhou International's long position.| Weichai Power vs. Shanghai Electric Group | Weichai Power vs. Xinjiang Goldwind Science | Weichai Power vs. Nordson | Weichai Power vs. CVD Equipment |
| Shenzhou International vs. Unifi Inc | Shenzhou International vs. Culp Inc | Shenzhou International vs. ENN Energy Holdings | Shenzhou International vs. Anhui Conch Cement |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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