Correlation Between Haier Smart and Premier Foods
Can any of the company-specific risk be diversified away by investing in both Haier Smart and Premier Foods 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 Haier Smart and Premier Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haier Smart Home and Premier Foods PLC, you can compare the effects of market volatilities on Haier Smart and Premier Foods 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 Haier Smart with a short position of Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and Premier Foods.
Diversification Opportunities for Haier Smart and Premier Foods
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Haier and Premier is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods PLC and Haier Smart 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 Haier Smart Home are associated (or correlated) with Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of Haier Smart i.e., Haier Smart and Premier Foods go up and down completely randomly.
Pair Corralation between Haier Smart and Premier Foods
Assuming the 90 days trading horizon Haier Smart Home is expected to generate 0.62 times more return on investment than Premier Foods. However, Haier Smart Home is 1.6 times less risky than Premier Foods. It trades about 0.17 of its potential returns per unit of risk. Premier Foods PLC is currently generating about -0.02 per unit of risk. If you would invest 163.00 in Haier Smart Home on December 4, 2024 and sell it today you would earn a total of 25.00 from holding Haier Smart Home or generate 15.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.33% |
Values | Daily Returns |
Haier Smart Home vs. Premier Foods PLC
Performance |
Timeline |
Haier Smart Home |
Premier Foods PLC |
Haier Smart and Premier Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Haier Smart and Premier Foods
The main advantage of trading using opposite Haier Smart and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' long position.Haier Smart vs. PRINCIPAL FINANCIAL | Haier Smart vs. Algonquin Power Utilities | Haier Smart vs. JSC Halyk bank | Haier Smart vs. Titan Machinery |
Premier Foods vs. CENTURIA OFFICE REIT | Premier Foods vs. Autohome | Premier Foods vs. HAVERTY FURNITURE A | Premier Foods vs. alstria office REIT AG |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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