Correlation Between Haier Smart and GMO Internet

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Haier Smart and GMO Internet 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 GMO Internet 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 GMO Internet, you can compare the effects of market volatilities on Haier Smart and GMO Internet 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 GMO Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and GMO Internet.

Diversification Opportunities for Haier Smart and GMO Internet

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between Haier and GMO is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and GMO Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Internet 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 GMO Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Internet has no effect on the direction of Haier Smart i.e., Haier Smart and GMO Internet go up and down completely randomly.

Pair Corralation between Haier Smart and GMO Internet

Assuming the 90 days trading horizon Haier Smart Home is expected to generate 1.47 times more return on investment than GMO Internet. However, Haier Smart is 1.47 times more volatile than GMO Internet. It trades about -0.09 of its potential returns per unit of risk. GMO Internet is currently generating about -0.16 per unit of risk. If you would invest  180.00  in Haier Smart Home on October 22, 2024 and sell it today you would lose (4.00) from holding Haier Smart Home or give up 2.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Haier Smart Home  vs.  GMO Internet

 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.
GMO Internet 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in GMO Internet are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, GMO Internet is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Haier Smart and GMO Internet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Haier Smart and GMO Internet

The main advantage of trading using opposite Haier Smart and GMO Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart position performs unexpectedly, GMO Internet 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 GMO Internet will offset losses from the drop in GMO Internet's long position.
The idea behind Haier Smart Home and GMO Internet 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.
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

Other Complementary Tools

Piotroski F Score
Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets