Correlation Between SIVERS SEMICONDUCTORS and Hisense Home

Can any of the company-specific risk be diversified away by investing in both SIVERS SEMICONDUCTORS and Hisense Home 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 SIVERS SEMICONDUCTORS and Hisense Home into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SIVERS SEMICONDUCTORS AB and Hisense Home Appliances, you can compare the effects of market volatilities on SIVERS SEMICONDUCTORS and Hisense Home 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 SIVERS SEMICONDUCTORS with a short position of Hisense Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIVERS SEMICONDUCTORS and Hisense Home.

Diversification Opportunities for SIVERS SEMICONDUCTORS and Hisense Home

0.63

Correlation Coefficient

SIVERS SEMICONDUCTORS  Hisense Home

Poor diversification

The 3 months correlation between SIVERS and Hisense is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SIVERS SEMICONDUCTORS AB and Hisense Home Appliances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisense Home Appliances and SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS AB are associated (or correlated) with Hisense Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisense Home Appliances has no effect on the direction of SIVERS SEMICONDUCTORS i.e., SIVERS SEMICONDUCTORS and Hisense Home go up and down completely randomly.

Pair Corralation between SIVERS SEMICONDUCTORS and Hisense Home

Assuming the 90 days horizon SIVERS SEMICONDUCTORS AB is expected to generate 3.35 times more return on investment than Hisense Home. However, SIVERS SEMICONDUCTORS is 3.35 times more volatile than Hisense Home Appliances. It trades about 0.02 of its potential returns per unit of risk. Hisense Home Appliances is currently generating about 0.07 per unit of risk. If you would invest  30.00  in SIVERS SEMICONDUCTORS AB on October 11, 2024 and sell it today you would lose (5.00) from holding SIVERS SEMICONDUCTORS AB or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.44%
Values	Daily Returns

SIVERS SEMICONDUCTORS AB  vs.  Hisense Home Appliances

SIVERS SEMICONDUCTORS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIVERS SEMICONDUCTORS AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SIVERS SEMICONDUCTORS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hisense Home Appliances

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hisense Home Appliances has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hisense Home is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SIVERS SEMICONDUCTORS and Hisense Home

The main advantage of trading using opposite SIVERS SEMICONDUCTORS and Hisense Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIVERS SEMICONDUCTORS position performs unexpectedly, Hisense Home 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 Hisense Home will offset losses from the drop in Hisense Home's long position.

The idea behind SIVERS SEMICONDUCTORS AB and Hisense Home Appliances pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.