Correlation Between Xinjiang Goldwind and Kawasaki Heavy
Can any of the company-specific risk be diversified away by investing in both Xinjiang Goldwind and Kawasaki Heavy 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 Kawasaki Heavy 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 Kawasaki Heavy Industries, you can compare the effects of market volatilities on Xinjiang Goldwind and Kawasaki Heavy 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 Kawasaki Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Goldwind and Kawasaki Heavy.
Diversification Opportunities for Xinjiang Goldwind and Kawasaki Heavy
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xinjiang and Kawasaki is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Goldwind Science and Kawasaki Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kawasaki Heavy Industries 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 Kawasaki Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kawasaki Heavy Industries has no effect on the direction of Xinjiang Goldwind i.e., Xinjiang Goldwind and Kawasaki Heavy go up and down completely randomly.
Pair Corralation between Xinjiang Goldwind and Kawasaki Heavy
Assuming the 90 days horizon Xinjiang Goldwind Science is expected to generate 1.52 times more return on investment than Kawasaki Heavy. However, Xinjiang Goldwind is 1.52 times more volatile than Kawasaki Heavy Industries. It trades about 0.07 of its potential returns per unit of risk. Kawasaki Heavy Industries is currently generating about -0.12 per unit of risk. If you would invest 86.00 in Xinjiang Goldwind Science on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Xinjiang Goldwind Science or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xinjiang Goldwind Science vs. Kawasaki Heavy Industries
Performance |
| Timeline |
| Xinjiang Goldwind Science |
| Kawasaki Heavy Industries |
Xinjiang Goldwind and Kawasaki Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xinjiang Goldwind and Kawasaki Heavy
The main advantage of trading using opposite Xinjiang Goldwind and Kawasaki Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinjiang Goldwind position performs unexpectedly, Kawasaki Heavy 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 Kawasaki Heavy will offset losses from the drop in Kawasaki Heavy's long position.| Xinjiang Goldwind vs. Shanghai Electric Group | Xinjiang Goldwind vs. American Superconductor | Xinjiang Goldwind vs. Cummins | Xinjiang Goldwind vs. Aquagold International |
| Kawasaki Heavy vs. Xinjiang Goldwind Science | Kawasaki Heavy vs. American Superconductor | Kawasaki Heavy vs. Cummins | Kawasaki Heavy vs. Aquagold International |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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