Correlation Between Xinjiang Goldwind and Ebara Corp
Can any of the company-specific risk be diversified away by investing in both Xinjiang Goldwind 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 Xinjiang Goldwind and Ebara Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xinjiang Goldwind Science and Ebara Corp ADR, you can compare the effects of market volatilities on Xinjiang Goldwind 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 Xinjiang Goldwind with a short position of Ebara Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Goldwind and Ebara Corp.
Diversification Opportunities for Xinjiang Goldwind and Ebara Corp
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xinjiang and Ebara is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Goldwind Science 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 Xinjiang Goldwind 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 Xinjiang Goldwind Science 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 Xinjiang Goldwind i.e., Xinjiang Goldwind and Ebara Corp go up and down completely randomly.
Pair Corralation between Xinjiang Goldwind and Ebara Corp
Assuming the 90 days horizon Xinjiang Goldwind is expected to generate 6.12 times less return on investment than Ebara Corp. But when comparing it to its historical volatility, Xinjiang Goldwind Science is 3.28 times less risky than Ebara Corp. It trades about 0.02 of its potential returns per unit of risk. Ebara Corp ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 411.00 in Ebara Corp ADR on September 1, 2024 and sell it today you would earn a total of 299.00 from holding Ebara Corp ADR or generate 72.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 68.79% |
| Values | Daily Returns |
Xinjiang Goldwind Science vs. Ebara Corp ADR
Performance |
| Timeline |
| Xinjiang Goldwind Science |
| Ebara Corp ADR |
Xinjiang Goldwind and Ebara Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xinjiang Goldwind and Ebara Corp
The main advantage of trading using opposite Xinjiang Goldwind and Ebara Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinjiang Goldwind 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.| Xinjiang Goldwind vs. Shanghai Electric Group | Xinjiang Goldwind vs. American Superconductor | Xinjiang Goldwind vs. Cummins |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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