Correlation Between Haier Smart and GMO Internet
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 Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Haier Smart Home vs. GMO Internet
Performance |
Timeline |
Haier Smart Home |
GMO Internet |
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.Haier Smart vs. Forsys Metals Corp | Haier Smart vs. Gruppo Mutuionline SpA | Haier Smart vs. Jacquet Metal Service | Haier Smart vs. ADRIATIC METALS LS 013355 |
GMO Internet vs. T MOBILE US | GMO Internet vs. FIH MOBILE | GMO Internet vs. T Mobile | GMO Internet vs. Gruppo Mutuionline SpA |
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.
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