Correlation Between Weichai Power and Siemens AG
Can any of the company-specific risk be diversified away by investing in both Weichai Power and Siemens AG 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 Siemens AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weichai Power and Siemens AG ADR, you can compare the effects of market volatilities on Weichai Power and Siemens AG 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 Siemens AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Power and Siemens AG.
Diversification Opportunities for Weichai Power and Siemens AG
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Weichai and Siemens is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Power and Siemens AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens AG 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 Siemens AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens AG ADR has no effect on the direction of Weichai Power i.e., Weichai Power and Siemens AG go up and down completely randomly.
Pair Corralation between Weichai Power and Siemens AG
If you would invest 7,835 in Siemens AG ADR on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Siemens AG ADR or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weichai Power vs. Siemens AG ADR
Performance |
| Timeline |
| Weichai Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Siemens AG ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Weichai Power and Siemens AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Power and Siemens AG
The main advantage of trading using opposite Weichai Power and Siemens AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Power position performs unexpectedly, Siemens AG 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 Siemens AG will offset losses from the drop in Siemens AG's long position.| Weichai Power vs. Shanghai Electric Group | Weichai Power vs. Xinjiang Goldwind Science | Weichai Power vs. Nordson | Weichai Power vs. CVD Equipment |
| Siemens AG vs. Sandvik AB | Siemens AG vs. Schneider Electric SA | Siemens AG vs. KONE Oyj | Siemens AG vs. Atlas Copco AB |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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