Correlation Between Haier Smart and GEELY AUTOMOBILE

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Can any of the company-specific risk be diversified away by investing in both Haier Smart and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE 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 GEELY AUTOMOBILE, you can compare the effects of market volatilities on Haier Smart and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and GEELY AUTOMOBILE.

Diversification Opportunities for Haier Smart and GEELY AUTOMOBILE

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Haier and GEELY is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEELY AUTOMOBILE has no effect on the direction of Haier Smart i.e., Haier Smart and GEELY AUTOMOBILE go up and down completely randomly.

Pair Corralation between Haier Smart and GEELY AUTOMOBILE

Assuming the 90 days trading horizon Haier Smart is expected to generate 1.42 times less return on investment than GEELY AUTOMOBILE. But when comparing it to its historical volatility, Haier Smart Home is 1.42 times less risky than GEELY AUTOMOBILE. It trades about 0.06 of its potential returns per unit of risk. GEELY AUTOMOBILE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  98.00  in GEELY AUTOMOBILE on October 25, 2024 and sell it today you would earn a total of  76.00  from holding GEELY AUTOMOBILE or generate 77.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Haier Smart Home  vs.  GEELY AUTOMOBILE

 Performance 
       Timeline  
Haier Smart Home 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Haier Smart Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Haier Smart is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
GEELY AUTOMOBILE 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GEELY AUTOMOBILE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GEELY AUTOMOBILE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Haier Smart and GEELY AUTOMOBILE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Haier Smart and GEELY AUTOMOBILE

The main advantage of trading using opposite Haier Smart and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart position performs unexpectedly, GEELY AUTOMOBILE 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 GEELY AUTOMOBILE will offset losses from the drop in GEELY AUTOMOBILE's long position.
The idea behind Haier Smart Home and GEELY AUTOMOBILE 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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