Correlation Between Weir and Shanghai Electric
Can any of the company-specific risk be diversified away by investing in both Weir and Shanghai 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 Weir and Shanghai Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Weir Group and Shanghai Electric Group, you can compare the effects of market volatilities on Weir and Shanghai 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 Weir with a short position of Shanghai Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weir and Shanghai Electric.
Diversification Opportunities for Weir and Shanghai Electric
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weir and Shanghai is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding The Weir Group and Shanghai Electric Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Electric and Weir 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 The Weir Group are associated (or correlated) with Shanghai Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Electric has no effect on the direction of Weir i.e., Weir and Shanghai Electric go up and down completely randomly.
Pair Corralation between Weir and Shanghai Electric
If you would invest 2,705 in The Weir Group on September 13, 2024 and sell it today you would earn a total of 0.00 from holding The Weir Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Weir Group vs. Shanghai Electric Group
Performance |
| Timeline |
| Weir Group |
| Shanghai Electric |
Weir and Shanghai Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weir and Shanghai Electric
The main advantage of trading using opposite Weir and Shanghai Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weir position performs unexpectedly, Shanghai 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 Shanghai Electric will offset losses from the drop in Shanghai Electric's long position.| Weir vs. Shanghai Electric Group | Weir vs. Xinjiang Goldwind Science | Weir vs. American Superconductor | Weir vs. Cummins |
| Shanghai Electric vs. Xinjiang Goldwind Science | Shanghai Electric vs. American Superconductor | Shanghai Electric vs. Cummins |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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