Correlation Between Haier Smart and SCHALTBAU HOLDING

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

Diversification Opportunities for Haier Smart and SCHALTBAU HOLDING

0.53

Correlation Coefficient

Haier Smart  SCHALTBAU HOLDING

Very weak diversification

The 3 months correlation between Haier and SCHALTBAU is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and SCHALTBAU HOLDING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCHALTBAU HOLDING 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 SCHALTBAU HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCHALTBAU HOLDING has no effect on the direction of Haier Smart i.e., Haier Smart and SCHALTBAU HOLDING go up and down completely randomly.

Pair Corralation between Haier Smart and SCHALTBAU HOLDING

If you would invest  115.00  in Haier Smart Home on October 25, 2024 and sell it today you would earn a total of  63.00  from holding Haier Smart Home or generate 54.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.2%
Values	Daily Returns

Haier Smart Home  vs.  SCHALTBAU HOLDING

Haier Smart Home

Risk-Adjusted Performance

0 of 100

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.

SCHALTBAU HOLDING

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days SCHALTBAU HOLDING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, SCHALTBAU HOLDING is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Haier Smart and SCHALTBAU HOLDING

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

The idea behind Haier Smart Home and SCHALTBAU HOLDING 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.